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NEW YORK, Nov 8 (Reuters) - The weekly volume of U.S. mortgage applications was stuck at its lowest level since mid-February, even as 30-year home borrowing costs retreated from the highest in three months, the Mortgage Bankers Association said on Wednesday.
The Washington-based group’s seasonally adjusted weekly index of mortgage activity was little changed at 389.7 in the week ended Nov. 3, compared with 389.8 the prior week. These were the weakest readings since 371.5 in the Feb. 17 week.
Last week, the average interest rate on conforming 30-year fixed-rate mortgages fell to 4.18 percent from the previous week’s 4.22 percent, which was the highest since July, the MBA said.
Conforming loans are those with balances of $424,100 or less that qualify for guarantees from federal mortgage agencies Fannie Mae and Freddie Mac.
Average interest rates on other types of home loans that the MBA tracks were unchanged to 4 basis points lower than the prior week.
Home borrowing costs fell in step with bond yields in the aftermath of President Donald Trump’s nomination last week of Federal Reserve Governor Jerome Powell to head the U.S. central bank. Powell, if confirmed, would succeed current chair Janet Yellen whose term expires in February.
Powell is seen as someone who would continue the Fed’s current approach to gradually raising interest rates and shrinking the Fed’s $4.5 trillion balance sheet.
Bond yields had spiked in October partly on worries Trump would select a candidate such as Stanford University economist John Taylor who is perceived to hold a hawkish view on monetary policy.
Benchmark yields have also retreated from their seven-month high after an October payrolls report that showed wage growth stalled and due to uncertainty over a Republican-sponsored bill aimed at overhauling the federal tax code.
The MBA’s seasonally adjusted gauge of purchase mortgage activity, a proxy for future home sales, rose 0.5 percent from a six-week low to 1,290.8.
The group’s seasonally adjusted index of mortgage refinancing activity dipped 0.5 percent to 1,290.8, the lowest since early July.
The share of refinancing requests of total applications grew to 49.0 percent from 48.7 percent the previous week.
Reporting by Richard Leong; Editing by Susan Thomas