Despite the lowest borrowing rates in six months, U.S. mortgage applications fell last week for the first time in four weeks, reports the Mortgage Bankers Association.

The association says its seasonally adjusted index of mortgage activity for last week decreased 4.9 percent to 566.6 from the previous week’s 595.8.

Normally, lower rates mean application volume rises. But this time is different; consumers appear to be turned off by the slow housing market.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.18 percent, down 0.18 percentage point from the previous week, to its lowest level since February. Fixed 15-year mortgage rates averaged 5.81 percent, down from 6.04 percent. Rates on one-year adjustable-rate mortgages (ARMs) decreased to 5.90 percent from 5.95 percent.

The refinance share of applications increased to 44.3 percent from 43.7 percent the previous week, its highest level since September 2005.

Source: Reuters News, Julie Haviv (09/27/2006)