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Home arrow Real Estate News arrow General News arrow Mortgage applications continue declining as housing slowdown
Mortgage applications continue declining as housing slowdown Print E-mail
Tuesday, 05 September 2006
NEW YORK - U.S. mortgage applications fell for the first time in four weeks as demand for home purchase loans dropped to the lowest level in nearly three year.    The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and purchasing loans, for the week ended Aug. 25 decreased 0.9 percent to 556.5 from the previous week’s 561.5, nearly 23 percent below their year-ago level.

It was the sixth straight week that home refinancing demand rose, which has primarily been a result of a recent retreat in mortgage rates.

Fueling the fall last week was the 1.6 percent fall in the MBA’s seasonally adjusted purchase mortgage index to 375.9, its lowest since November 2003.  “We’re still in the soft landing camp for the housing market,” he said. “We do see a sizable impact on the economy and expect that the slowing housing market is going to trim roughly one percentage point off of growth over the rest of this year and next year as well.”

The purchase index, which is considered a timely gauge of U.S. home sales, is standing well below its year-ago level of 470.6, a drop of 20.1 percent.

Last week borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.39 percent, up 0.01 percentage point from the previous week when they sank to their lowest since March. Interest rates were above year-ago levels of 5.73 percent but below a four-year high of 6.86 percent touched in June.

Fixed 15-year mortgage rates averaged 6.06 percent, up from 6.04 percent the previous week. Rates on one-year adjustable-rate mortgages (ARMs) increased to 5.97 percent from 5.91 percent. The ARM share of activity increased to 26.8 percent of total applications from 26.4 percent the previous week.

After historically low mortgage rates fueled a five-year housing boom, a deluge of recent data showing a surge in the number of homes for sale and dwindling demand signals the once-robust market is cooling, industry analysts say.

In fact, the gap between the supply of homes for sale and demand for housing has caused prices to start leveling off and even decline in some geographic areas.

Many analysts view the housing market as a key factor in Federal Reserve policy. With a slower housing market, growth in the United States should level off as well, which may play a role in monetary policy going forward.

Edwina Baniqued

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