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U.S. Home Loan Demand Drops to Four-Month Low

U.S. mortgage applications fell for a second straight week as interest rates remained near
recent highs, an industry group said Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both refinancing and purchasing loans, for the week ended June 22 fell 3.9% to 618.6 -- its lowest in four months.

The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was down 0.7%.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.60 percent, unchanged from the previous week, but hovering around their highest since mid-2006. A year
earlier the rates stood at 6.86%.

The MBA's seasonally adjusted purchase index, widely considered a timely gauge of U.S. home sales, fell 4.95% to 428.9. The index was above its year-ago level of 389.0.

The group's seasonally adjusted index of refinancing applications fell 2.5% to 1,731.6, its lowest this year.

The refinance share of applications increased to 38.7% from 38% the previous week.

Fixed 15-year mortgage rates averaged 6.24%, down from 6.28%.

Adjustable Rates Drop

While rates on 30-year fixed-rate mortgages have been on an upward trend.

Rates on one-year adjustable-rate mortgages (ARMs) decreased to 5.51% from 5.7%.

The ARM share of activity increased to 20.4% from 20.3% the previous week.

Recent data from home sales, released by other institutions, suggest a delayed recovery for the hard-hit sector.

The MBA's survey covers about 50% of all U.S. retail residential loans. Respondents include mortgage banks, commercial banks and thrifts.

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