Posted on 11/13/2003 6:06:00 AM PST by Starwind
UPDATE - U.S. mortgage applications lowest since June 2002
Thursday November 13, 7:01 am ET
(Adds analyst comments, background on housing and the economy)
NEW YORK, Nov 13 (Reuters) - Applications for U.S. home loans dropped last week to their lowest level in almost a year and a half, a trade group said on Thursday, as rising rates cut into demand for homes and mortgage refinancing.
The Mortgage Bankers Association of America said its market index, a barometer of mortgage applications, fell 8.6 percent to 626.0 in the week ended Nov. 7, its lowest level since the week ended June 14, 2002.
The U.S. housing sector, which has provided crucial support to the economy for two years, is showing early signs of slowing as rates have risen since the summer.
The rate for a 30-year mortgage, the most popular home loan in the U.S, rose 0.09 percent to 5.94 percent last week, the trade group said. Thirty-year rates have risen almost a full percentage point since reaching record lows in mid-June, according to MBA data.
With higher rates, applications to refinance mortgages fell 10.1 percent, bringing the trade group's refinancing index to 2,084.2, its lowest level since late August.
Applications for mortgages to buy homes fell 7.1 percent, bringing the group's purchase index to 375.4, 18.5 percent below its peak in late May. That should translate into slowing home sales in the coming months.
But for now, home sales are still strong. Existing home sales reached a record in September, the last month for which data is available, while new home sales were close to a record level.
Strong housing demand is filtering through to the rest of the economy, as consumers buy appliances and furniture for their homes.
Consumer spending on durable goods rose an eye-popping 26.9 percent in the third quarter, according to gross domestic product data, helping to fuel overall economic growth of 7.2 percent.
"Housing is one of the most important underpinnings of consumer spending right now," said Vincent Boberski, head of bond research at RBC Dain Rauscher in Chicago.
WASHINGTON, D.C. (November 13, 2003) - The Mortgage Bankers Association (MBA) today released its Weekly Mortgage Applications Survey for the week ending November 7. The Market Composite Index of mortgage loan applications-a measure of mortgage loan applications for purchases and refinancings-decreased by 8.6 percent to 626.0 on a seasonally adjusted basis from 685.2 one week earlier. On an unadjusted basis, the Index decreased by 9.8 percent compared with last week and was down 38.1 percent compared with the same week one year earlier.
The MBA seasonally adjusted Purchase Index decreased by 7.1 percent to 375.4 from 404.3 the previous week. The seasonally adjusted Refinance Index decreased by 10.1 percent to 2084.2 from 2319.4 one week earlier. Other seasonally adjusted index activity included the Conventional Index, which decreased 7.8 percent to 883.1 from 957.8 the previous week. The Government Index decreased 14.5 percent to 196.9 from 230.3 the previous week.
The refinance share of mortgage activity decreased to 50.9 percent of total applications, from 51.1 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 26.6 percent from 25.4 percent the previous week.
The average contract interest rate for 30-year fixed-rate mortgages increased to 5.94 percent from 5.85 percent one week earlier, with points decreasing to 1.39 from 1.47 the previous week (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.
The average contract interest rate for 15-year fixed-rate mortgages increased to 5.28 percent from 5.17 percent one week earlier, with points increasing to 1.45 from 1.40 the previous week (including the origination fee) for 80 percent LTV loans.
The average contract interest rate for one-year ARMs increased to 3.63 percent from 3.58 percent one week earlier, with points increasing to 1.11 from 1.10 the previous week (including the origination fee) for 80 percent LTV loans.
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