Mortgage applications fall as rates rise

According to the Mortgage Bankers Association's weekly application survey, volume fell 4.6% during the week ended May 23.

May 28, 2008: 7:30 AM EDT

WASHINGTON (AP) -- Mortgage application volume fell 4.6% during the week ended May 23, according to the trade group Mortgage Bankers Association's weekly application survey.

The MBA's application index fell to 593.3 during the week, from 621.6 the previous week.

Refinance volume declined 8.9%, pushing total volume lower. Refinance applications accounted for 46.1% of total applications, down from 48.2% a week earlier.

Purchase volume rose 0.1%.

The index peaked at 1,856.7 during the week ended 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 593.3 means mortgage application activity is 5.933 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 declined as interest rates climbed. The average interest rate for traditional, 30-year fixed-rate mortgages increased to 5.96% from 5.90% a week earlier.

Rates for 15-year fixed-rate mortgages -- a popular option for refinancing a home -- averaged 5.49% during the week ended May 23, compared with 5.42% the previous week.

The average interest rate for one-year adjustable-rate mortgages rose to 6.92% from 6.71%.