US home-purchase applications fall by most since early April

MORTGAGE applications for home purchases in the US slid last week by the most since early April as mortgage rates remained above 7 per cent.

The Mortgage Bankers Association’s (MBA) index of mortgage applications to buy a home decreased 4.4 per cent in the week ended May 31, which included the Memorial Day holiday, according to data released on Wednesday (Jun 5).

The contract rate on a 30-year fixed mortgage ticked up two basis points to 7.07 per cent, marking the ninth straight week above 7 per cent. The rate on a five-year adjustable mortgage, however, slumped 27 basis points to a two-month low of 6.37 per cent.

The overall index of applications, which includes those for home purchases and refinancing, declined 5.2 per cent last week to 180.4, the lowest since Feb 23. The group’s refinancing measure dropped 6.8 per cent.

While home listings have stabilised, prospective buyers are balking at high asking prices and borrowing costs. A National Association of Realtors gauge of contract signings on home resales dropped to a four-year low.

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