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Mortgages fell last week as rates rose

Mortgages fell last week as rates rose
Wednesday September 14, 7:23 am ET

NEW YORK (Reuters) - Applications for U.S. residential mortgages fell last week as higher interest rates deterred borrowers from refinancing their existing home loans, an industry trade group's figures showed on Wednesday.

The Mortgage Bankers Association said its index of total mortgage applications for home purchase and refinancing loans fell 1.4 percent to 760.6 in the week ended September 9. The index rose 6.8 percent in the previous week.

The MBA's purchase index rose 2.9 percent to 513.4, adding to the previous week's 6.1 percent gain -- the highest level of activity since the week ended July 1 when it hit 520.8.

The refinancing index fell 6.7 percent to 2,198.7, nearly erasing the previous week's 7.7 percent gain.

The indexes were all seasonally adjusted, the MBA said.

Fixed 30-year mortgage rates rose 8 basis points, or 0.08 of a percentage point, to an average of 5.72 percent, excluding fees, compared with 5.64 percent in the previous week.

While the fixed 30-year mortgage rate, the industry benchmark, has fallen from its 2005 high of 6.08 percent reached in late March, it is above the 2005 low of 5.47 percent of late June. It is also higher than where it stood a year ago when the rate was 5.68 percent.

Fixed 15-year mortgage rates last week averaged 5.29 percent, up from 5.18 percent the previous week. Rates on one-year adjustable-rate mortgages (ARMs) increased to 4.82 from 4.81 percent.

ARM ACTIVITY PICKS UP

With ARMs, low initial payments allow borrowers to buy homes they may not be able to afford with a fixed-rate loan.

With fixed mortgage interest rates rising last week, demand for adjustable-rate mortgages climbed. ARMs accounted for 28.2 percent of total applications last week, up from 26.5 percent the previous week. ARM demand reached a 2005 high of 36.6 percent in late March.

Refinancings decreased as a percentage of all mortgage applications last week, down to 42.9 percent from 44.8 percent, the MBA said.

The MBA's survey covers about 50 percent of all U.S. retail residential mortgage originations. Respondents include mortgage bankers, commercial banks and thrifts.


LINK: http://biz.yahoo.com/rb/050914/economy_mortgages.html?.v=1