Home loan demand drops to 5-month low

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, widely considered a timely gauge of U.S. home sales, for the week ended July 20 decreased 3.6 percent to 609.0, the lowest level since the week ended February 16 when it stood at 606.6.

The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was down 0.4 percent at 621.6.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.59 percent, down 0.02 percentage point from the previous week. Interest rates were also below year-ago levels at 6.69 percent.

The MBA's seasonally adjusted purchase index fell 5.0 percent to 424.2, its lowest reading since April. The index was above its year-earlier level of 389.0.

The group's seasonally adjusted index of refinancing applications decreased 1.4 percent to 1,692.9.

The refinance share of applications increased to 38.5 percent from 37.7 percent the previous week.

Fixed 15-year mortgage rates averaged 6.24 percent, down from 6.29 percent.

Rates on one-year adjustable-rate mortgages (ARMs) increased to 5.62 percent from 5.60 percent.

The ARM share of activity stood at 21.0 percent, unchanged from the previous week.

U.S. housing industry indexes, in general, tend to be volatile, but recent data suggest a delayed recover for the hard-hit sector.

The MBA's soft data precedes separate reports this week gauging home sales.

The National Association of Realtors will release data on sales of U.S. existing homes on Wednesday and the U.S. Commerce Department will release new homes sales data on Thursday.

The MBA's survey covers about 50 percent of all U.S. retail residential loans. Respondents include mortgage banks, commercial banks and thrifts.