US mortgage activity falls to 2-1/2 year low - MBA

* Refinancing applications fall to lowest in over 17-1/2 years

* Loan requests to buy a home decline to near 6-month low

* Most mortgage rates stay flat or fall from prior week (Adds details on latest data, graphics)

U.S. mortgage application activity decreased to its lowest in 2-1/2 years last week as loan requests to refinance an existing home fell to their weakest level since December 2000, the Mortgage Bankers Association said on Wednesday.

The Washington-based group's seasonally adjusted index on weekly home loan requests fell 3 percent to 342.5 in the week ended Aug. 3. This was the lowest reading since 328.6 in the week of Jan. 1, 2016.

The decline in home refinancing could be a future drag on domestic consumer spending. Homeowners refinance their homes either to reduce their monthly mortgage payments or to extract cash from the values of their homes.

RELATED: Check out the best U.S. cities for homeowners:

11 PHOTOS
Best cities for homeowners
See Gallery
Best cities for homeowners

1. Denver, Colorado

If you recently became a homeowner in the Mile High City, you can pat yourself on the back. Our data shows that Denver is the best city for homeowners. Home values have been consistently growing. From 2010 to 2015, Denver home values grew 12.6%, with a 5.3% increase between 2014 and 2015. Denver also has the second-lowest average effective property tax rate in our top 10 at 0.54%.

Compare mortgage rates with our free mortgage rates comparison tool. 

Photo credit: Getty

2. Fremont, California

Demand for housing in Fremont has risen recently, perhaps due to the city’s proximity to San Diego. Fremont residents saw the largest rise in median home values in our top 10 from 2014 to 2015. Values rose 5.58% over that time period. But the short-term growth is not the only reason Fremont is a great place for homeowners. Fremont also has one of the lowest property crime rates in the country. There are 1,880 property crimes per 100,000 residents in Fremont. 

Photo credit: Getty

3. Aurora, Colorado

Aurora saw median home values jump more than 5% from 2014 to 2015. To put that 5% in context, the median home value in Aurora in 2014 was $179,300 and grew to $189,100 in 2015. However the longer-term trends are not as favorable for Aurora homeowners as they are for some other cities. Growth over the six-year period from 2010 to 2015 shows that home values only rose about 0.7%.

Photo credit: Getty

4. Honolulu, Hawaii

Homeowners in Hawaii have seen some impressive growth in home values over the past few years. Over the 2010 to 2015 time period, median home values in Honolulu grew 8% and from 2014 to 2015, they grew 3.4%. Homeowners in Honolulu also have the benefit of paying very low property taxes – only 0.29%, according to U.S. Census Bureau data. 

Photo credit: Getty

5. Irvine, California

From 2014 to 2015, median home values in Irvine grew from $662,200 to $688,200. That’s an increase of almost 4%. Over the period of 2010 to 2015, home values grew 1.64%. However, homeowners in Irvine can expect to pay a quite a bit in property taxes. Data from the Census Bureau shows that the average effective property tax rate in Irvine is 0.81%. That’s the second-highest in the top 10.

Buying in the Golden State? Check out California mortgage rates.  

Photo credit: Getty

6. Arlington, Virginia

There is plenty of demand for housing in Arlington, possibly related to how close the city is to the nation’s capital. Home values grew 6.3% in Arlington from 2010 to 2015. That growth looks set to continue, as median home values rose 2.17% from 2014 to 2015, as well. Prospective Arlington buyers will want to be aware that the property tax rate here is on the high side. The 0.87% average effective property tax rate is the highest in the top 10.

Photo credit: Getty

7. Gilbert, Arizona

Gilbert is the first of two Arizona cities to crack our top 10. Home values in Gilbert rose by almost 5.4% between 2014 to 2015. Gilbert also has the lowest property crime rate in the top 10. There are about 1,321 property crimes per 100,000 residents in Gilbert. A fact that homeowners in Gilbert are probably well aware of.

Photo credit: Getty

8. Santa Ana, California

Hopefully if you bought your home in Santa Ana sometime around 2010, you have not sold it yet. The median home value in Santa Ana was down 13% over the period from 2010 to 2015. However, home values now look to be trending up. They rose 5.19% between 2014 and 2015. Santa Ana also offers homeowners an effective property tax rate around 0.7% and a low property crime rate of only 2,155 per 100,000 residents.

Photo credit: Getty

9. (tie) Boston, Massachusetts

With a population of 650,000, Boston is the second-largest city to crack out top 10. Homeowners here will appreciate the increasing home values and low property taxes, especially considering how expensive buying a home can be. The median home in 2015, for example, cost almost $400,000. For the Bostonians who managed to buy a home, they saw median values rise 3.72% from 2014 to 2015. That’s the 30th-fastest rate in our study. Plus, if you own a home in Boston, you can expect to only have to pay an average effective property tax of 0.77% – a top 20 rate in our study.

Photo credit: Getty

9. (tie) Chandler, Arizona

Another suburb of Phoenix, Chandler is great for homeowners for many of the same reasons as Gilbert. Home values in Chandler rose 5.17% from 2014 to 2015. That’s the 14th-largest increase in our study. Property taxes are also very affordable. Homeowners in Chandler pay an average effective property tax of only 0.67%, one of the lowest in the study. 

Photo credit: Getty

HIDE CAPTION
SHOW CAPTION
of
SEE ALL
BACK TO SLIDE

 

So far, the drop in refinancing due primarily to higher mortgage rates has yet to hurt household expenditures.

MBA's barometer on mortgage applications for refinancing declined by 4.5 percent to 927.6 last week, which was its lowest in more than 17-1/2 years.

The share of refinancing fell to 36.6 percent of total applications from 37.1 percent the week before. It held above 34.8 percent set in July, which was its smallest share since August 2008.

Interest rates on 30-year fixed-rate "conforming" home loans, whose balances are $453,100 or less, averaged 4.84 percent, unchanged from a week earlier but up from 4.22 percent at the end of 2017, MBA said.

Most mortgage rates MBA tracks were lower than the previous week.

Meanwhile, MBA's measure on loan applications to buy a home, a proxy on future housing activity, fell 2 percent to 233.1 in the latest week, which was the lowest since 225.5 in the week of Feb. 16.

Home sales and construction have softened in recent months as a result of rising borrowing costs, tight housing inventories and expensive home prices.

(Reporting by Richard Leong Editing by Frances Kerry)

Read Full Story