NEW YORK, April 2 - Applications for mortgages in the United States fell 17 percent last week from the previous week, a report said on Wednesday, as Iraq war news kept Americans glued to television sets and out of the mortgage lender's office. "The dreaded CNN effect is in force now -- people are watching the news instead of going out and buying things," Ken Mayland, president of Clearview Economics said on Tuesday, referring to consumer behavior. But the housing sector, which has provided crucial support for an economy struggling to recover, is still going strong. The number of mortgage applications fell last week, but was still over 50 percent higher than the average for last year and double the average for 2001, the Mortgage Bankers Association of America said on Wednesday.
Declines in applications may suggest the sector is starting to stabilize. Other data paint a similar picture--for example, new and existing home sales fell a bit in February. But these declines may be the temporary result of unusually cold weather last month, and concern about the war with Iraq. The impact of the war has been felt in other areas of consumer activity. Chain store sales fell 1.4 percent last week from the previous week, a report from the Bank of Tokyo-Mitsubishi and UBS Warburg said on Tuesday. Even if the sector is not growing as fast as it was late last year and earlier this year, housing won't likely slow significantly until interest rates rise, said John Ryding, senior economist at Bear Stearns in New York, on Tuesday. The MBA said its weekly index of applications to refinance mortgages fell 20.3 percent last week to 6,484.6, its lowest level since the week ending Feb. 21. The MBA's index of applications for mortgages to buy homes fell 5 percent to 364.7. The MBA's index of overall mortgage applications fell 17 percent to 1262.5.
The declines came even as mortgage rates fell. The 30-year mortgage rate fell 0.18 percentage points to 5.63 percent, while the 15-year rate fell 0.30 percentage points to 4.83 percent.//