Mortgage Application Volume Falls To 6-Year Low

Washington, DC, Aug. 20, 2008--Mortgage application volume fell last week to its lowest levels in more than six years, according to the Mortgage Bankers Association.

While fewer new homes are being built, fewer customers are also refinancing existing mortgages. A sharp drop in refinance volume in recent weeks has been the leading driver of declining application volume.

Refinancing decreased 3.7 percent  from the previous week and purchase application volume fell 0.4 percent.

The trade group's application index fell 1.5 percent from the prior week. Application volume is down 61 percent from its 2008 peak in February.

The survey provides a snapshot of mortgage lending activity among mortgage bankers, commercial banks and thrifts. It covers about 50 percent of all residential retail mortgage originations each week.

Application volume fell despite a drop in interest rates as well. The average rate for traditional, 30-year fixed-rate mortgages fell to 6.47 percent during the week ended Aug. 15, from 6.57 percent the previous week.

The average rate for 15-year fixed-rate mortgages, often a popular option for refinancing a home, fell to 5.99 percent from 6.17 percent. The average rate for one-year adjustable-rate mortgages fell to 7.07 percent from 7.15 percent.