Mortgage applications tumble

Volume of applications dropped more than 22% as most interest rates increased sharply, MBA's weekly survey says.

February 20 2008: 8:24 AM EST

WASHINGTON (AP) -- Mortgage application volume tumbled 22.6% during the week ending Feb. 15 as most interest rates moved higher, according to the Mortgage Bankers Association's weekly application survey.

The MBA's mortgage application index fell to 822.8 for the week, from 1,063.5 during the previous week.

Refinance volume dropped 27.9% during the week, while purchase volume fell 11.55%. Refinance applications accounted for 61.7% of total applications.

The index peaked at 1,856.7 during the week ending May 30, 2003, at the height of the housing boom.

An index value of 100 is equal to the application volume on March 16, 1990, the first week the MBA tracked application volume. A reading of 822.8 means mortgage application activity is 8.228 times higher than it was when the MBA began tracking the data.

The survey provides a snapshot of mortgage lending activity among mortgage bankers, commercial banks and thrifts. It covers about 50% of all residential retail mortgage originations each week.

Application volume slipped as most interest rates rose sharply. The average interest rate for traditional, 30-year fixed-rate mortgages increased to 6.09% from 5.72%. The average interest rate for 15-year fixed-rate mortgages, a popular option for refinancing a home, increased to 5.55% from 5.18%.

The average rate for one-year adjustable-rate mortgages remained steady at 5.72%