US MORTGAGE APPLICATIONS INDEX DECLINE 11%

Mortgage applications in the United States declined last week as the biggest jump in mortgage rates since June led to a fifth straight drop in refinancing.

Bloomberg reported on Wednesday that the Mortgage Bankers Association's index fell 11 per cent in the week ended April 2. The Washington-based group's refinance measure plunged 17 per cent, while the purchase gauge rose 0.2 per cent.

The average rate on a 30-year fixed mortgage rose to the highest level since August as the economy showed signs of strengthening. The end of a tax credit for homebuyers and rising foreclosures this year represent hurdles to a sustained recovery in housing.

'We're concerned there won't be a lot of underlying demand for housing once the tax credit is gone,' Adam York, an economist at Wells Fargo Securities LLC in Charlotte, North Carolina, said before the report. 'It's going to be a long slog.'

Today's report showed the average rate on a 30-year fixed mortgage rose to 5.31 percent from 5.04 per cent a week earlier, the mortgage bankers group said. At the current 30-year rate, monthly payments for each $100,000 of a loan would be $555.93, up $35.50 from a year earlier, when the rate was 4.73 per cent.

The average rate on a 15-year fixed mortgage rose to 4.54 per cent from 4.34 percent a week earlier. The rate on a one-year adjustable mortgage climbed to 7.03 per cent from 6.88 per cent.

As lending costs climbed, the share of applicants seeking to refinance fell to 58.7 per cent, the lowest since August, from 63.2 per cent.

The government extended a credit for first-time buyers in November and expanded it to include some current owners. With the credit's deadline looming at the end of this month, contracts to buy existing homes in February rose 8.2 per cent, the largest gain since October 2001, the National Association of Realtors said this week.

Earlier reports showed purchases slumped. Sales of existing homes, which track closings, fell in February to the lowest level in eight months, the National Association of Realtors reported March 23. Sales of new homes fell the same month to the lowest level on record, the Commerce Department said March 24.