Mortgage application volume drops 1.5%

Applications drop as interest rate for traditional 30-year mortgage rises to 6.57%, just shy of year's high.

August 13, 2008: 7:52 AM EDT

WASHINGTON (AP) -- Mortgage application volume fell 1.5% during the week ended Aug. 8 as fixed interest rates hovered near annual highs, according to the Mortgage Bankers Association's weekly application survey.

The MBA's application index fell to 425.9 from 432.6 a week earlier, according to the trade group's survey.

Application volume declined as fixed interest rates rose. The average rate for traditional, 30-year fixed-rate mortgages rose to 6.57% during the week ended Aug. 8, just shy of the 2008 high of 6.59% set last month.

The average rate for 15-year fixed-rate mortgages, which are often a popular choice for refinancing a home, rose to 6.17% from 6.02%. It was the highest average interest rate for 15-year fixed-rate mortgages this year.

Refinance application volume fell 4.2 % during the week, while purchase volume was flat. Refinance applications accounted for 35.2% of all applications during the week.

The index peaked at 1,856.7 during the week ending May 30, 2003, at the height of the housing boom.

An index value of 100 is equal to the application volume on March 16, 1990, the first week the MBA tracked application volume. A reading of 425.9 means mortgage application activity is 4.259 times higher than it was when the MBA began tracking the data.

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

The average rate for one-year adjustable-rate mortgages declined slightly to 7.15% from 7.17%.