Applications for U.S. home mortgages last week fell to their lowest since December despite a sharp drop in borrowing costs, according to data from an industry group on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity declined 2.9 percent to 652.0 in the week ended March 14. It was the lowest since the last week of December.
The MBA's seasonally adjusted index of refinancing applications fell 4.6 percent to 2,335 last week, despite a drop in long-term mortgage rates. The average 30-year fixed mortgage rate plunged 0.39 percentage point to 5.98 percent, the MBA said.
The MBA's index measuring loan requests for home purchases slipped by 1 percent to 365.0.
Falling rates have not been enough to jump-start the ailing housing market as lenders burned by rising delinquencies and foreclosures have tightened underwriting. Expectations that home prices will fall through 2009 have also kept lenders and investors that fueled the housing boom at bay.
One bright spot has been government programs that are geared to accept homeowners without pristine credit, analysts said. Volume for loans guaranteed by the Federal Housing Administration has increased as lenders have seen funding from Wall Street investment banks shrivel.
The MBA's government program application index rose 9.2 percent in the week to 321.7. The level is up from 129.7 from a year earlier, the MBA said. Refinancings led the rise in FHA applications, it said.