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Is the Housing Boom Cooling Down? The filing of mortgage applications fell to its lowest level since 2002, convincing one expert that the end of intense speculation has arrived.BY VICTOR EPSTEIN The Miami Herald: Real Estate Posted on Thu, Jan. 05, 2006 WASHINGTON - The number of mortgage applications filed last week fell to the lowest level since May 2002, more evidence of an end to the five-year boom in housing. The Mortgage Bankers Association said Wednesday its index of applications to buy a home or refinance an existing mortgage declined 1.5 percent to 545.9 last week, the fourth straight decrease, from 554.1 a week earlier. The group's measure of purchases dropped to the lowest level since February, even as borrowing costs fell, suggesting a weakening in the housing market that will help slow the economy. ''An air of caution has entered the housing industry,'' said Chris Rupkey, senior financial economist at Bank of Tokyo-Mitsubishi in New York. ``You have to be pretty brave to buy at a time when many people feel there's a bubble out there.'' The gauge of applications to purchase homes fell 3.4 percent to 418.3, the lowest since Feb. 18, from 432.9 the week before. The group's gauge of refinancing rose 8.3 percent to 1363.2 from 1259.1. ''I wouldn't panic at this juncture,'' said Nick Buss, a senior vice president at PNC Financial Services, in an interview from Pittsburgh. ``Overall, it's showing that we're slowing at a fairly measured pace.'' The housing market accounted for 50 percent of U.S. economic growth and more than half of private payroll job creation from 2001 to 2005, according to a report in August by Merrill Lynch & Co. The average rate on a 30-year fixed mortgage dropped to 6.15 percent last week from 6.21 percent a week earlier. The rate is up from 5.7 percent the same week a year ago. At the current mortgage rate, the cost for every $100,000 of a loan would be $609.23 a month. When the rate, as measured by the Mortgage Bankers Association, was at a record low of 4.99 percent in June 2003, the cost was $536.21 a month. The share of mortgage applications for refinancing increased to 42.7 percent from 40.2 percent the previous week. The gain was partly due to borrowers shifting from adjustable- rate loans to fixed rates, according to mortgage lenders.The average one-year adjustable rate increased to 5.41 percent last week from 5.36 percent, the mortgage bankers group said. Robert Moulton, founder and president of Americana Mortgage Group in Manhasset, N.Y., said that he expects mortgage volume to decline by a third this year from 2005. ''It's a combination of less refinancing activity and homes being on the market a little longer,'' Moulton said. ``We're gradually converting into a buyer's market because there's so much inventory.''
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