A GAUGE of US applications for home purchases dropped for a fifth week, approaching the lowest level since 1995 as mortgage rates held above 7 per cent.

The Mortgage Bankers Association’s (MBA) index of mortgage applications for home purchases dropped 4.5 per cent in the week ended Feb 23.

At 127.6, the gauge is the weakest since October when it slid to levels not seen in nearly three decades, suggesting momentum in the housing market is fading.

The contract rate on a 30-year fixed mortgage eased two basis points to 7.02 per cent, hovering near the highest since early December.

Mortgage rates started the year below 7 per cent, boosting sales of new and existing homes in January. But Federal Reserve officials – cognisant of strong economic growth, a healthy job market and somewhat-sticky inflation – have said they’re in no rush to lower interest rates, which has pushed home-financing costs higher in recent weeks.

The MBA’s overall index for mortgage applications, which tracks both home purchases and refinancing, declined 5.6 per cent last week to a three-month low. The measure for refinancing dropped 7.3 per cent.

A NEWSLETTER FOR YOU

Tuesday, 12 pm

Property Insights

Get an exclusive analysis of real estate and property news in Singapore and beyond.

Sign Up

The MBA survey uses responses from mortgage bankers, commercial banks and thrifts and has been conducted weekly since 1990. The data cover more than 75 per cent of all retail residential mortgage applications in the US. BLOOMBERG