New mortgage applications fall 29%

Mortgage Bankers Association's survey reveals that application volume declined in latest week as rates for fixed-rate loans increased.

April 2, 2008: 7:38 AM EDT

WASHINGTON (AP) -- Mortgage application volume tumbled 28.7% during the week ending March 28, according to the Mortgage Bankers Association's weekly survey.

After a 41.1% jump in volume the previous week, the MBA's application index fell back in line with where it had been the previous three weeks. The index fell to 688.3 from 965.9 the previous week. Two weeks earlier the index stood at 652.

Refinance volume plunges. Refinance volume fell 38.1%, while purchase volume declined 11.8%. Refinance applications accounted for 53.4 % of total applications during the week ending March 28.

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 688.3 means mortgage application activity is 6.883 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 half of all residential retail mortgage originations each week.

Volume declined as interest rates on fixed-rate mortgages increased slightly, while adjustable-rates posted small declines.

The average interest rate for traditional 30-year fixed-rate mortgages increased to 5.75% from 5.74% the previous week. The average rate for 15-year fixed-rate mortgages, often a popular option for refinancing a home, increased to 5.27% from 5.23%.

The average interest rate for one-year adjustable-rate mortgages fell to 7% from 7.02%.