Mortgage applications drop 7.8%

Mortgage application volume falls to one-third of where it was during the height of the housing boom in May, 2003.

May 21, 2008: 7:57 AM EDT

NEW YORK (AP) -- Mortgage application volume fell 7.8% during the week ending May 16, according to the trade group Mortgage Bankers Association's weekly application survey.

The MBA's application index fell to 621.6 from 674.4 the previous week as both refinance and purchase volume declined.

Refinance volume fell 8.7% during the week, while purchase application volume fell 6.9%.

Refinance applications accounted for 48.2% of all applications during the week, compared with 48.7% the previous week.

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 621.6 means mortgage application activity is 6.216 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 fell as interest rates moved higher. The average rate for traditional, 30-year fixed-rate mortgages rose to 5.9% from 5.82% a week earlier.

The average rate for 15-year fixed-rate mortgages, a popular option for refinancing a home, rose to 5.42% from 5.38%.

Rates for a one-year adjustable-rate mortgage averaged 6.71% during the week, compared with 6.6% the previous week.