The number of people applying for home mortgages loans decreased last week, with mortgage activity falling for the first time this summer despite steady interest rates, an industry group said today. The Mortgage Bankers Association said its adjusted index of loan applications dropped .7 percent to 756.2 for the last week. MBA’s buyer’s index, a gauge of home purchases, fell 2.2 percent to 488.4. Summer factors may have been the reason for last week’s decline in loan demand. People are be more focused on their vacations and sending their children back to school this time of year.
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Fixed 30 year mortgage interest rates dropped 1 basis point, or 0.01 of a point, to a value of 5.78 percent, compared with 5.79 the week before. While the 30 year rate is below the 2005 high reached in March and above the 2005 low late June, it matches its level a summer ago. MBA forecasts that 30 year mortgage interest rates should hit 6 percent by years end and 6.5 percent by the end of 2006 slowing value appreciation of homes next year. Fixed 15 year mortgage rates last week averaged 5.41 percent, up from 5.40 percent the week before. Rates on one year adjustable rate mortgages dropped to 4.84 percent last week from 4.85 percent the week before.
The housing market is sending mixed signals because on one end it appears to be cooling down. Sales of new homes showed strength, jumping to a record high this summer, up 6.5 percent over June. Tuesday, the National Association of Realtors reported sales of homes dropped 2.6 percent in July. Economists watching the impact of housing on the economy place more emphasis on new home sales than existing home sales because it triggers more economic activity, including construction and the purchase of new furniture. Tracking mortgage interest trends over the past summer, the MBA said it moving average of loan applications rose .1 percent higher to 753.7 from 753.2. The purchase index’s average rose .2 percent to 495.3 from 494.4. The mortgage refinancing index’s four week average dropped .1 percent to 2256.6 from 2258.2.