Mortgage applications drop

Wednesday, May 19, 2004 | 9:42 a.m.

An index of U.S. mortgage applications fell 12 percent last week as home purchases slowed for the first time in more than a month and loan refinancing dropped to the lowest level since early January.

The Mortgage Bankers Association said its gauge of loan demand fell to 654.1 from 742.2. It was the second-straight decline in the index and came as 30-year mortgage rates exceeded 6 percent for a fourth consecutive week.

"The general trend is going to be continued weakness in refinancing, and purchases will probably hit a lower plateau and stay there, " said Carl Steen, analyst at Maria Fiorini Ramirez Inc.

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