U.S. mortgage applications fell for a third consecutive week as interest rates on 30-year home loans climbed to their highest levels since late March, an industry trade group said Wednesday.
The Mortgage Bankers Association said its index of mortgage application activity for the week ended Oct. 7 slid 2.6 percent to 694.8 -- its lowest level since mid-April.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.98 percent last week, up 0.04 percentage point from 5.94 percent the prior week. The average 30-year rate touched its highest level since the week ended March 25 when it hit 6.08 percent, its highest rate this year.
It is also higher than where it stood a year ago when the rate was 5.69 percent. During 2005, the fixed 30-year mortgage rate, the industry benchmark, has climbed on and off from a low of 5.47 percent in late June.
The MBA’s purchase mortgage index fell 0.9 percent to 469.5 from prior week’s 473.8. The index, considered a timely gauge on U.S. home sales, declined for a fourth consecutive week to its lowest level since May 27.
The group’s index of refinancing applications fell 4.9 percent to 2,004.9 compared with 2,107.4 for the previous week.
The indexes were all seasonally adjusted, the MBA said.
Fixed 15-year mortgage rates last week averaged 5.55 percent last week, unchanged from the previous week. Rates on one-year adjustable-rate mortgages (ARMs) increased to 5.26 percent from 5.13 percent.
With ARMs, low initial payments have allowed borrowers to buy homes they may not have been able to afford with fixed-rate loans.
But last week the percentage difference between the average 30-year fixed-mortgage rate and one-year ARMs decreased to its lowest spread since March 9, 2001, the MBA said.
The ARM share of activity decreased to 29.5 percent of total applications last week from 29.8 percent the previous week. ARM demand reached a 2005 high of 36.6 percent in late March.
Refinancings also decreased as a percentage of all mortgage applications, falling to 43.5 percent from 44.5 percent, the MBA said.
The group’s survey covers about 50 percent of all U.S. retail residential mortgage originations. Respondents include mortgage bankers, commercial banks and thrifts.
