An industry trade group said on Wednesday that U.S. mortgage applications fell slightly last week. This was driven by a decline in home refinancing loans as interest rates hit the highest in four years. Celia Chen, director of housing economics at Moody's Economy.com, a consulting firm, said last week's drop in applications adds support to the view that rising interest rates are increasingly weighing on the U.S. housing sector.

The MBA's seasonally adjusted purchase mortgage index rose 0.1 percent to 414.8. Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.73 percent, up 0.12 percentage point from the previous week. The group's seasonally adjusted index of refinancing applications decreased 2.2 percent to 1,466.1. The refinance share of applications decreased to 35.5 percent from 35.7 percent the previous week.

Fixed 15-year mortgage rates averaged 6.37 percent, up from 6.27 percent the previous week. Rates on one-year adjustable-rate mortgages (ARMs) increased to 6.22 percent from 6.09 percent. The ARM share of activity decreased to 29.6 percent of total applications from 30.7 percent the previous week.

Helping support the U.S. economy's recovery from recession despite uncertain business investment, historically low mortgage rates have fueled a five-year housing boom. May house rose 5.0 percent in May to a 1.957 million unit annual pace compared with an upwardly revised 1.863 million-unit rate in April.

The National Association of Home Builders/Wells Fargo Housing Market Index of sentiment fell 4 points to 42 in June from an upwardly revised 46 in May, the NAHB said. The MBA's survey covers about 50 percent of all U.S. retail residential mortgage loans. Respondents include mortgage bankers, commercial banks and thrifts.

By M. Sese
http://realestatepress.org