NEW YORK, Oct 15 - Applications for mortgages to buy homes, often seen as an early indicator of home sales, last week fell to their lowest level since April, as rates edged higher, a trade group said on Wednesday. The Mortgage Bankers Association of America said its index of applications for mortgages to buy homes fell 18.6 percent, to 359.0, its lowest level since the week ended April 25. Even if the decline in applications signals that home sales are likely to fall later this year, few economists expect sales to plummet, because rates are still low by historical standards. Applications for mortgages to buy homes last week were just 8.3 percent below their average for the year.
Home sales, which have provided crucial support to the economy, are so far on track to set a record this year. Existing home sales hit a record in August, the last month for which figures are available, and new home sales approached a record. The declines in applications came as the average rate for a 30-year mortgage, the most popular home loan in the U.S., rose 0.02 percentage points last week to 5.81 percent, according to the trade group. The week before, the 30-year rate had risen 0.12 percentage points. Rising rates have crimped home purchases to some degree, but have dramatically reduced refinancing. The MBA's refinancing index last week dropped 22.1 percent to 2,340.1, its lowest level since the week ended Aug. 29, and more than 75 percent below its peak in late May. "Refinancing is half dead," said Al Wojnilower, economist at Craig Drill Capital, a hedge fund in New York. That could cut into consumer spending, Wojnilower said. Mortgage refinancing has fueled billions of dollars of consumer spending for the last two years, by allowing consumers to pull money out of their homes and cut monthly payments. Overall home mortgage applications fell 20.5 percent, bringing the MBA's market index to 649.6, its lowest level since the week ended Aug. 29.//