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U.S. MBA's Mortgage Applications Index Fell 1.2% Last Week
Bob Willis in Washington


March 1 (Bloomberg) -- Mortgage applications in the U.S. fell for a fourth time in five weeks, reflecting fewer home purchases and adding to evidence the housing market is slowing.

The Mortgage Bankers Association's weekly index of applications to buy homes and refinance mortgages declined 1.2 percent to 571.5 during the week ended Feb. 24 from 578.5. The home purchase gauge decreased 1.9 percent to 400.8, the second- lowest level in a year, the group said today in Washington.

Purchase applications have declined by a quarter since reaching a high in June, reinforcing a forecast by the National Association of Realtors that home sales will fall about 5 percent this year from a record in 2005. Smaller gains in home prices and higher borrowing rates suggest housing may detract from economic growth this year.

``Housing has peaked and from here it's only downhill,'' said Zoltan Pozsar, an economist at Moody's Economy.com in West Chester, Pennsylvania. ``It's going to take some of the wind out of the sails of consumer spending, but it won't choke off consumption.''

The mortgage bankers group's index of refinancing increased by 0.1 percent to 1573.5 from 1571.4 a week before. Refinancing, a source of cash for consumers, is down by a third from a year ago.

Refinancing's share of total applications fell to 38.1 percent, the lowest in 10 months, from 38.2 percent. The portion claimed by adjustable-rate mortgages fell to 28.3 percent from 29.1 percent. The average rate on a one-year adjustable mortgage rose to 5.64 percent last week from 5.6 percent.

Mortgage Rates

The average rate on a 30-year fixed mortgage decreased to 6.18 percent from 6.22 percent, according to the Mortgage Bankers Association. The rate compares with 5.74 percent a year ago. At the current 30-year fixed rate, borrowing costs for every $100,000 of a mortgage would be $611.17, compared with $582.94 a year earlier.

The average 15-year mortgage rate decreased to 5.84 percent from 5.87 percent, today's report showed.

The 30-year fixed mortgage rate has risen less than the federal funds target rate since the Federal Reserve began its series of increases in June 2004. The overnight bank rate has increased to 4.5 percent from 1 percent, while the 30-year rate has risen as high as 6.3 percent from a low of 4.99 percent in June 2003, according to Mortgage Bankers Association figures.

A report yesterday showed a drop in home sales and more houses available for sale. The supply of existing homes rose to 5.3 month's worth at the current sales pace in January, the most since August 1998, the National Association of Realtors said in Washington.

``We're making a transition from a seller's market to a buyer's market,'' Bob Moulton, president of Manhasset, New York- based Americana Mortgage Group, said in an interview. ``Inventory is starting to swell.''

Sales of previously owned homes fell 2.8 percent in January, a fifth consecutive decline, to an annual rate of 6.56 million, the Realtors said yesterday.

The Mortgage Bankers Association survey covers about half of all U.S. retail residential mortgage originations and has been compiled every week since 1990.

http://www.bloomberg.com/apps/news?pid=10000103&sid=awCJGi.yklkw&refer=us