Mortgage applications drop 15.1%

WASHINGTON - Mortgage applications in the United States fell last week as higher borrowing costs tempered refinancing.

The Mortgage Bankers Association's index of applications to purchase a home or refinance a loan decreased 15.1 percent to 743.5 in the week ended Feb. 20 from 875.3 in the prior week. The group's refinancing measure dropped 19.1 percent and the purchase index slipped 2.6 percent.

Owners may be waiting for President Obama's $275 billion plan, aimed at making refinancing easier, to take effect early next month. Even so, ongoing declines in prices and rising inventories signal no end in sight to the housing crisis at the center of the longest recession in a quarter century.

The refinancing gauge decreased to 3,618 after surging 64 percent to 4,472.9 a week earlier. The mortgage bankers' purchase index fell to 250.5 from 257.3.

The average rate on a 30-year fixed loan climbed to 5.07 percent from 4.99 percent the prior week, the second-lowest level on record. The rate reached a record-low 4.89 percent in mid-January.

Mortgage rates have plunged since early December when the Federal Reserve said it would buy Fannie Mae, Freddie Mac, and Ginnie Mae-backed mortgage securities. The move pushed down yields on the mortgage bonds relative to Treasury notes.

The share of mortgage applicants seeking to refinance loans decreased to 69.7 percent of total applications from 74 percent the prior week.

At the current rate, monthly borrowing costs for each $100,000 of a loan would be $541.11, compared with $617.02 a year ago.

The average rate on a 15-year fixed mortgage rose to 4.71 percent from 4.66 percent the prior week. The rate on a one-year adjustable-rate mortgage climbed to 6.13 percent from 6.10 percent.