Mortgage Applications Down

Mortgage applications fell for the first time in four weeks as demand hit the lowest level in almost three years.

According to the Mortgage Bankers Association weekly report, the seasonally adjusted index of mortgage application activity for the week ended August 25 decreased 0.9%, landing nearly 23% below last year's level for the same week.

The decline remained consistent with the slowdown being seen in the housing market.

"We're still in the soft landing camp for the housing market," explained John Shin, senior economist for Lehman Brothers. "We do see a sizable impact on the economy and expect that the slowing housing market is going to trim roughly one percentage point off of growth over the rest of this year and the next year as well."

For the sixth straight week, home refinancing demand increased as a result of decreasing mortgage rates.

Last week, the 30-year fixed-rate mortgage rate averaged 6.39%, well below June's four-year high of 6.86%. However, they were well above last year's level of 5.73%.

Seasonally adjusted index of refinancing applications increased slightly for the week, up to 1,609.2 from 1,608.5.

The refinancing share of total applications increased to 41.5%, up from 40.6% the week prior. This marks the highest level since February.

Fifteen-year fixed-rate mortgages averaged a rate of 6.06%, up from 6.04% the week prior. The one-year adjustable-rate mortgage also saw an increase, up to 5.97% from 5.91%.

ARMs made up 26.8% of total loan applications, an increase from 26.4% the week prior.

The MBA's survey covers 50% of all US retail residential mortgage loans. Respondents include mortgage bankers, commercial banks and thrifts.