U.S. mortgage applications fell last week for the first time in four weeks, reflecting a drop in demand for home refinancing even as interest rates hovered near recent lows, an industry trade group said on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended March 16, which includes both refinancing and purchasing lloans, decreased 2.7% to 672.1.
The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was up 2.5% to 665.1.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.06%, up 0.03% from the previous week when it reached its lowest since early December.
Interest rates were also significantly below year-ago levels of 6.31%.
Rapidly rising defaults in the subprime mortgage market, which caters to borrowers with poor credit histories, and collapsing lenders may be taking a toll on home sales.
The MBA's seasonally adjusted purchase index, considered a timely gauge of U.S. home sales, fell 0.9% to 410.6. The index, however, was above its year-ago level of 393.6.
The group's seasonally adjusted index of refinancing applications slipped 4.5% to 2,208.6. A year earlier the index stood at 1,574.5.
The refinance share of applications fell to 45.3% from 46.2% the previous week.
Fixed 15-year mortgage rates averaged 5.79%, slightly up from 5.78%. Rates on one-year
adjustable-rate mortgages increased to 5.88% from 5.86.
The ARM share of activity slipped to 20.9% from 21.9% the previous week.
U.S. housing industry indexes, in general, tend to be volatile and have recently painted a mixed picture, with some pointing to weakening and others to stabilization in 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.