Mortgage applications fall to 11-month low

Mortgage rates slipped a bit this week, but mortgage applications fell to an 11-month low as demand for loans to buy homes fell, according to industry data.

Interest rates on 30-year fixed-rate mortgages, excluding fees, averaged 6.22%, down 0.06 percentage point from the previous week's 6.28%, according to the Mortgage Bankers Association.

The 30-year fixed-rate mortgage, the industry benchmark, is substantially above its 2005 low of 5.47% of late June, but below its 6.33% high the week of Nov. 11.

Rates on one-year adjustable-rate mortgages decreased to an average 5.41% from 5.50%.

The MBA said its seasonally adjusted index of mortgage application activity for the week ended Dec. 16 fell 4.0% to 594.6 from 619.3 the week before.

The group's seasonally adjusted index of applications for mortgages to buy homes fell 5.2% to 453.1 from the previous week's 477.9.

The index is considered a timely gauge of U.S. home sales.

"Housing has passed its peak," said Robert Brusca, chief economist at Fact and Opinion Economics.

The jury is still out on whether the housing sector will wind down gradually from its unprecedented boom of recent years or contract sharply and hurt the overall economy.

This week's housing results have been mixed.

In addition to falling loan demand, home builder optimism fell in December to its lowest since April 2003, according to the National Association of Home Builders.

On the other hand, the government said housing construction accelerated more than expected in November, helped by mild weather, as housing starts rose 5.3% from October to an annualized 2.123 million units. But that is a volatile number, subject to big revisions.

The MBA said total loan applications dropped to the lowest since the week ended Jan. 7, when the index reached 587.8.

The group's seasonally adjusted index of refinancing applications dropped 1.6% to 1,418.1 compared with 1,441.8 the previous week. Volume was at its lowest since the week ended June 25, 2004, when the index reached 1,386.9.

What are people saying about mortgages today:

Rates on 30-year mortgages edged down last week to a seven-month low. Mortgage-giant Freddie Mac reported Thursday that 30-year, fixed-rate mortgages fell to 6.3 percent, down slightly from 6.31 percent two weeks ago. It put rates at the lowest level since they were at 6.24 percent the first week of March.

Bank of Hawaii, Central Pacific Bank, Territorial Savings Bank and Wells Fargo Home Mortgages all cut their 30-year mortgage rates to 5.75 percent this week.

Most people think of a mortgage as a means to an end. After all, you buy a house, not a home loan. But a mortgage is much more than the path to homeownership. It is a financial instrument that must be managed, just like any other financial investment.