U.S. Mortgage Applications Drop to Lowest Level in 19 Years

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Mortgage applications in the U.S. fell for the third straight week, marking another sign of an easing housing recovery.

The number of all applications fell by 8.5 percent on a seasonally adjusted basis for the week ending February 21, after falling 4.1 percent the week before and 2.0 percent the week before that.

The seasonally adjusted purchase index dropped four percent from one week earlier to the lowest level since 1995.

"Purchase applications were little changed on an unadjusted basis last week, but this is the time of a year we would expect a significant pickup in purchase activity, and we are not yet seeing it," said Mike Fratantoni, MBA's chief economist.

The booming housing recovery has been showing signs of slowing down as of late. Yesterday, the S&P/Case Shiller Home Price Index showed U.S. home prices have lost momentum.

Last week, the National Association of Realtors reported a drop in existing home sales, reaching its lowest level in more than a year.

Analysts have named rising interest rates as one of the reasons for a slowdown in the housing market. However, others have cited severe weather throughout the nation. Home builders have reported lower confidence and the Census Bureau reported lower housing starts and fewer building permits, all due to the abnormal weather conditions.

Today's report shows the refinance index fell by 11 percent from the previous week. The refinance share of mortgage activity decreased to 58 percent of all applications, the lowest level since September 2013, from 61 percent the week prior, according to the MBA.

More from the report:

• The adjustable-rate mortgage (ARM) share of activity remained unchanged at 8 percent of total applications.

• The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 4.53 percent, the highest rate since week ending January 17, 2014, from 4.50 percent, with points increasing to 0.31 from  0.26 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.  The effective rate increased from last week.

• The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) increased to 4.47 percent, the highest rate since week ending January 24, 2014, from 4.45 percent, with points increasing to 0.13 from 0.11 (including the origination fee) for 80 percent LTV loans.  The effective rate increased from last week.

• The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 4.17 percent, the highest rate since week ending January 24, 2014, from 4.16 percent, with points increasing to 0.20 from 0.14 (including the origination fee) for 80 percent LTV loans.  The effective rate increased from last week.

• The average contract interest rate for 15-year fixed-rate mortgages increased to 3.56 percent, the highest rate since week ending January 24, 2014, from 3.55 percent, with points decreasing to 0.28 from 0.33 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.

• The average contract interest rate for 5/1 ARMs decreased to 3.17 percent from 3.20 percent, with points decreasing to 0.31 from 0.38 (including the origination fee) for 80 percent LTV loans.  The effective rate decreased from last week.