WASHINGTON – Mortgage applications nationwide plunged last week, led by applications to refinance, as interest rates rose to their highest level this year, according to a report today from the Mortgage Bankers Association.
For the week ended Friday, the trade group’s Market Composite Index – a measure of mortgage loan application volume – fell a seasonally adjusted 22.6 percent from the previous week’s level to a seasonally adjusted 822.8 points, after falling 2.1 percent in the week ending Feb. 8. Compared with the same week in 2007, the index rose 33.9 percent.
The decline was the sharpest since the week ended July 25, 2003, when the index fell 24 percent, Bloomberg News records.
The MBA’s seasonally adjusted Purchase Index fell 11.5 percent to 357.6 points, after dipping 0.3 percent the week before. Meanwhile, the group’s seasonally adjusted Refinance Index fell 27.9 percent to 3,533.8 points, accelerating from the previous week’s 0.3-percent decline.
Refinancing applications accounted for 61.7 percent of loan applications, compared with the previous week’s 67.4 percent. At the same time adjustable-rate mortgages (ARMs) increased to 12.8 percent of home-loan applications, after rising to 9.9 percent the previous week, the MBA said.
The average contract interest rate for 30-year fixed-rate mortgages last week increased 0.37 percentage points to 6.09 percent, after rising 0.11 percentage points the week before, while the average rate for one-year ARMs remained unchanged at 5.62 percent, after rising 0.1 percentage points in the week ended Feb. 8.
Concerns about the economy and possible further declines in housing prices may continue to slow sales for months to come, some analysts said. “There’s really no end in sight to the declines we’re seeing,” Michael Gregory, a senior economist at BMO Capital Markets in Toronto, told Bloomberg News.
But David Seiders, chief economist for the National Association of Homebuilders, yesterday told Bloomberg Television that an increase in the number of people shopping for homes is “giving us some hope that prospective buyers think it is a better time to buy.”
The Mortgage Bankers Association is a trade group representing the real estate finance industry. Its 3,000 member companies include mortgage firms, commercial banks, thrifts, life insurance companies and others. Additional information, including the MBA’s Weekly Application Survey, is available at www.mortgagebankers.org.
