U.S. MBA mortgage applications index dropped 6.7% last week

WASHINGTON – Mortgage applications in the U.S. fell for a third consecutive week as rising borrowing costs limited home buying and refinancing.

The Mortgage Bankers Association’s index decreased 6.7 percent in the week ended April 8 to lowest level in two months, the Washington-based group reported on Wednesday . The group’s gauge of purchases declined 4.7 percent, while its refinancing index plunged 7.7 percent.

Homeowners seeking to refinance loans to reduce monthly payments are getting discouraged by 30-year mortgage rates that have risen for four straight weeks. Sales remain depressed while foreclosures mount, making it more likely property prices will continue to fall and weigh on consumer spending and economic growth.

“The housing market is stuck in a rut,” Ryan Sweet, a senior economist at Moody’s Analytics Inc. in West Chester, Pa., said before the report. “Sales are failing to gain any momentum and the foreclosure pipeline is bursting at the seams. Prices still have room to go down.”

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The average rate on a 30-year fixed loan increased to 4.98 percent, the highest since Feb. 18, from 4.93 percent the prior week. Borrowing costs have climbed since reaching 4.21 percent in October, the lowest since the group’s records began in 1990.

The average rate on a 15-year fixed mortgage climbed to 4.17 percent from 4.14 percent.

Share Refinancing

The share of applicants seeking to refinance a loan dropped to 60.3 percent last week from 61.2 percent the prior week.

Housing data indicate the industry that helped trigger the recession is still struggling. Sales of existing homes decreased 9.6 percent in February, and new-home purchases fell to the lowest level on record.

Bank of America Corp. CEO Brian T. Moynihan said efforts to prevent foreclosures are frequently failing, with more than half of borrowers in some categories defaulting a second time.

“We’re reaching a point where some customers will be dealing with the reality that despite the myriad programs and the best efforts of everyone in this room, and of our teammates working with these customers, foreclosure may be unavoidable,” Moynihan said yesterday during a speech to state attorneys general in Charlotte, N.C.

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