Mortgage applications drop

Industry group says the number of people applying for a home loan fell nearly 3% last week.

March 19, 2008: 8:08 AM EDT

WASHINGTON (AP) -- Mortgage application volume fell 2.9% during the week ending March 14, according to the Mortgage Bankers Association's weekly application survey.

The MBA's application index fell to 652 from 671.7 the previous week.

Refinance volume fell 4.6%, while purchase volume declined 1% during the week. Refinance applications accounted for 49.7% of total applications, the first time all year that purchase application volume was larger than refinance volume.

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 652 means mortgage application activity is 6.52 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.

Volume declined as interest rates continued their wild swings. Fixed-rate mortgage rates plummeted, while adjustable-rates continued to skyrocket.

The average interest rate for traditional, 30-year fixed-rate mortgages fell to 5.98% from 6.37% the previous week. The average rate for 15-year fixed-rate mortgages, which are often used in refinance applications, plummeted to 5.24% from 5.72%.

The average rate for one-year adjustable-rate mortgages rose to 6.95% from 6.72%, more than one percent higher than they were just two weeks ago.