US mortgage applications index hits 6-yr low

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NEW YORK, June 4 (Reuters): US mortgage applications fell for a third consecutive week, reaching its lowest level in over six years as demand for home refinancing loans plunged, an industry group said Wednesday.

The Mortgage Bankers Association (MBA) said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended May 30 dropped 15.3 per cent to 502.3 -- its lowest level since the week ended April 19, 2002.

The US housing market is suffering one of the worst downturns in its history. Significantly tighter lending standards and an unwieldy supply of homes for sale are just some of the factors preventing the US housing market from recovering from its two-year-long slump.

The souring of demand for home loans last week may be tied to sharply higher interest rates on mortgages.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.17 per cent, up 0.21 percentage point from the previous week.

Interest rates, however, were below year-ago levels of 6.35 per cent.