Applications for U.S. residential mortgages fell last week for the first time in three weeks, weighed by a sharp drop in demand for home-purchase and refinancing loans, an industry group said Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity fell 5.5% to 641.1 in the week ended August 17.
Applications, however, may have climbed earlier in August as a major lender hurt by turmoil in mortgage bond and other financial markets closed its doors, forcing borrowers to reapply elsewhere, said Jay Brinkmann, a vice president of research at the MBA.
"The drop in applications we see here may be an indication that those borrowers have now been taken care of," he said.
American Home Mortgage Investment, the 10th biggest U.S. lender in the first half of 2007, on August 2 said it stopped making loans. Creditors pulled support from the company which specialized in making loans to borrowers with credit profiles better than subprime but below prime.
American Home Mortgage originated $35 billion in mortgages in the first six months of 2007, according to Inside Mortgage Finance, a trade publication.
The MBA's seasonally adjusted index of applications for loan refinancings dropped 6.4% to 1,806.3 last week. The MBA's purchase index, a gauge of loan requests for home purchases, slipped 5% to 441.5.
The four-week moving average for the overall mortgage applications index rose 1.3% to 645.8. Fixed 30-year mortgage rates averaged 6.49% last week, excluding fees, up from 6.45% the prior week.