U.S. mortgage applications fall despite lower borrowing costs

NEW YORK (Reuters) - U.S. mortgage applications fell for a third consecutive week even as some 30-year home borrowing costs declined to their lowest levels since April 2018 in line with lower bond yields, the Mortgage Bankers Association said on Wednesday.

The Washington-based group's seasonally adjusted index on mortgage activity decreased 2.5 percent to 378.9 in the week ended Feb. 1.

Three weeks earlier, it reached an 11-month high at 411.8, raising hopes of a revival in the housing market that decelerated when mortgage rates rose to their highest in about 8-1/2 years in late 2018.

Interest rates on 30-year fixed-rate mortgages with loan balances of $484,350 or less averaged 4.69 percent, which was the lowest since mid-April. A week earlier, they averaged 4.76 percent.

Other mortgage rates MBA tracks were 5 basis points to 10 basis points lower than a week ago.

The week's decline in loan applications was driven by a further pullback in requests to buy a home.

MBA's seasonally adjusted gauge on purchase loan applications, which is seen as a proxy on future housing activity, was 4.9 percent lower at 253.10 last week.

"Despite more favorable borrowing costs...(purchase applications) are now almost 2 percent lower than a year ago," Joel Kan, MBA's associate vice president of industry surveys and forecasts said in a statement.

"However, moderating price gains and the strong job market, including evidence of faster wage growth, should help purchase growth going forward," Kan said.

MBA's seasonally-adjusted barometer on mortgage refinancing edged up 0.3 percent at 1,053.4.

The refinance share of total mortgage applications fell to 41.6 percent from 42.0 percent the previous week.

(Reporting by Richard Leong; Editing by Chizu Nomiyama)