US mortgage applications drop further despite falling rates

New York

US MORTGAGE applications declined for a fourth consecutive week even as some home borrowing costs fell to their lowest levels in more than 11 months, the Mortgage Bankers Association (MBA) said on Wednesday.

The Washington-based industry group's seasonally-adjusted index on borrower requests to lenders for a loan to buy a home and to refinance one decreased 3.7 per cent to 364.8 in the week ended Feb 8. This was the weakest reading in a month.

"Application activity fell last week - even with rates decreasing - as renewed uncertainty about the domestic and global economy likely held potential homebuyers off the market," Joel Kan, MBA's associate vice-president of industry surveys and forecasts, said in a statement.

Home borrowing costs have fallen in step with lower US bond yields as investors have piled into Treasuries in a safe-haven move prompted by concerns about slowing global growth and trade conflicts between China and the United States.

The average interest rate on 30-year fixed-rate mortgages with loan balances of US$484,350 or less, fell to 4.65 per cent, the lowest level since the week of March 2, 2018. A week ago, "conforming" 30-year mortgage rates averaged, 4.69 per cent.

Other mortgage rates MBA tracks were 2 basis points to 7 basis points lower than a week earlier.

MBA's seasonally adjusted index on purchase loan applications, which is seen as a proxy on future housing activity, declined 6.1 per cent to 237.7 last week, the lowest level since the end of 2018.

"Despite the recent decline in applications, we still expect that the continued strength of the job market and lower rates will support more purchase activity in the coming months," Mr Kan said.

MBA's seasonally-adjusted barometer on mortgage refinancing dipped 0.1 per cent to 1,052.4 in the latest week. The refinance share of total mortgage applications grew to 43.2 per cent from 41.6 per cent the week before. REUTERS