The Mortgage Bankers Association's composite index of applications declined 8.7% on a seasonally-adjusted basis to 508.6 from last week's 557.1. Compared to a year ago, the composite index is down 21.3% on an unadjusted basis.
The Refinance Index decreased 15.0% to 1,378.6 from 1,622.1 the previous week and the seasonally adjusted Purchase Index decreased 4.3% to 360.2 from 376.2 one week earlier.
Mortgage rates rise
Meanwhile, the average rate for a 30-year fixed loan rose to 6.57% from 6.24% the prior week. The average rate for a 15-year fixed mortgage increased to 6.14% from 5.78%. Also, the share of applications that involved a refinance declined to 37.4% from 39.8% one week earlier.
Created in 1990, the Mortgage Bankers Association's loan survey covers about half of all U.S. retail residential mortgage originations.
Economic Analysis: This is not what the U.S. Federal Reserve intended when it initiated its interest rate easing cycle in September 2007. Mortgage rates remain stubbornly high -- the average rate has risen about 60 basis points in the past six months; this is a phenomenon the U.S. Federal Reserve will have to watch closely. The Fed has cut benchmark, short-term interest rates by 325 basis points since September 2007, but mortgage rates have not fallen. That's a tell-tale sign that banks remain concerned about their portfolios and about sluggish housing market conditions.
For the housing sector to regain its sea legs -- and to help increase U.S. commercial activity -- mortgage rates must move toward the lower-end of their 10-year average range, ideally below 6% for a 30-year fixed rate mortgage.










