WASHINGTON - Mortgage applications fell by the most in more than a year in the week that ended June 17 as borrowers retreated after a surge in home-loan requests the week before, a private survey showed.
The Mortgage Bankers Association's index of mortgage applications dropped 11.3 percent for the week to 786.8, the biggest decline since May 2004. The index, which measures requests for loans to buy homes and to refinance existing home loans, rose 17.4 percent the week ending June 10. The gauge is still at its second-highest level since April 2004.
"Declines in this volatile measure need to be taken with a grain of salt, as the trend for nearly all the housing industry data remains upward," said Michael R. Englund, chief economist at Action Economics LLC in Boulder, Colo.
Mortgages have drifted lower this year, instead of climbing as the Federal Reserve raised its benchmark lending rate.
The National Association of Realtors, a real estate group, said this month it expects sales of new and existing homes to set records this year, topping last year's all-time highs.
The index of applications for loans to buy homes fell 9.4 percent to 479.4, the association said. The gauge of applications to refinance existing mortgages declined 13.2 percent to 2,575, still the second highest since April 2004. The four-week average for the overall index rose 1.9 percent to 784.6 from 770.3.
"Interest rates have been low for a long time," said Mark Vitner, senior economist at Wachovia Corp. in Charlotte, N.C. "Just about everyone that wanted to refinance has already done so."
The mortgage bankers' survey covers about half of all retail residential mortgage originations and has been conducted weekly since 1990. The base period is March 16, 1990, when the value for all indexes was 100.
The refinancing share of mortgage applications fell to 45.6 percent last week from 46.4 percent the previous week. The share of applications for adjustable-rate mortgages fell to 30.7 percent of total applications from 30.9 percent the previous week.