Mortgage applications drop to 2008 low

NEW YORK (Reuters) - Applications for U.S. home mortgages last week slumped to their lowest since December in another sign the housing market is far from recovery, according to data reported by an industry group on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity dropped 11.1 percent to 567.0 in the week ended April 25, its lowest since the week ending December 28.

The MBA's index of applications for loan refinancings fell 16.7 percent last week to 1,905.2. The gauge of loan requests for home purchases decreased 4.8 percent to 340.1.

The drop in applications follows data Tuesday that showed foreclosure filings more than doubled last quarter from a year earlier, adding to inventories and exacerbating price declines.

Falling home values have deterred would-be buyers, who fear taking a loss shortly after a potential purchase, economists say.

Existing home sales plunged 19.3 percent in the year through March, and the inventory of homes for sale lingered at levels that would take 10 months to clear at the current sales pace, the National Association of Realtors said last week.

Fixed 30-year mortgage rates averaged 6.01 percent in the week, down 3 basis points from 6.04 percent the prior week.

(Reporting by Al Yoon, editing by Walker Simon)