US mortgage applications last week sank to their lowest level in over four years, as home purchase loan demand tumbled for the third straight week.
The Mortgage Bankers Association (MBA) said its seasonally adjusted index of mortgage application activity for the week ended July 28th decreased 1.2 per cent to 527.6 - its lowest since May 2002 - from the previous week's 533.8.
The MBA's seasonally adjusted purchase index fell 3.3 per cent to 376.2, its lowest since November 2003. The purchase index, widely considered a timely gauge of US home sales, is standing well below its year-ago level of 494.5.
The most popular fixed 15-year mortgage rates averaged 6.28 per cent, down from 6.31 per cent the previous week. Rates on one-year variable-rate mortgages decreased to 6.18 per cent from 6.25 per cent.
The share of variable rate mortgages fell to 27.8 per cent of total applications - its lowest since March 2004 - from 28.6 per cent in the prior week.
After historically low mortgage rates fueled a five-year housing boom, most analysts agree that the market is cooling off from its record run. Nearly all recent measures of housing activity have pointed not just to a slowdown, but to a sector that is struggling. Sales are sliding, supply is swelling and price appreciation is abating.
The MBA's survey covers about 50 per cent of all U.S. retail residential mortgage loans. Respondents include mortgage bankers, commercial banks and thrifts.