Mortgage applications fall, MBA says

Volume dropped 1.9% in the week ending March 7, with refinance accounting for half of total applications, according to trade group survey.

March 12, 2008: 7:58 AM EDT

WASHINGTON (AP) -- Mortgage application volume fell 1.9% during the week ending March 7, according to the trade group Mortgage Bankers Association's weekly application survey released Wednesday.

The MBA's application index fell to 671.7, from 684.9 the previous week.

Refinance volume dropped 4.7% while purchase volume increased 1.6%. Refinance applications accounted for 50.6% of total applications. Refinance volume has steadily declined since January, when it accounted for 73% 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 671.7 means mortgage application activity is 6.717 times higher than it was then.

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.

Volume fell slightly as interest rates rose sharply. The average interest rate for traditional, 30-year fixed-rate mortgages increased to 6.37% from 5.98%. The average rate for 15-year fixed-rate mortgages -- often used as an option for refinancing a home -- increased to 5.72% from 5.26%.

The average rate for one-year adjustable-rate mortgages increased to 6.72% from 5.83%.