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Mortgage Applications Dip Amid Uncertainty

Mortgage applications in the U.S. declined for the fourth straight week while refinance applications showed a slight rise, according to a report Wednesday by the Mortgage Bankers Association.

Big homebuilders that rallied several percentage points on other housing data Tuesday, such as PulteGroup (PHM), Lennar (LEN), D.R. Horton (DHI) and Toll Bros. (TOL), traded nearly flat Wednesday afternoon — and some gave back a little of their gains.

For the week ended Nov. 22, the MBA's seasonally adjusted composite index of mortgage application activity, which reflects both home purchases and refinances, fell 0.3% from the prior week.

The mortgage purchase index declined 0.2% from a week earlier, while the refinance index increased by 0.1%. The refinance share of mortgage activity increased to 66% of total applications from 64% the previous week.

The composite index has declined 7% over the past four weeks amid speculation over when the Federal Reserve will pull back on its $85 billion-per-month bond-buying program. That's expected to happen when the Fed believes that the economy is in a sustained recovery.

According to Wednesday's MBA report, the average rate for 30-year fixed-rate mortgages increased to 4.48% in the latest week from 4.46% the previous week.

Uncertainty over mortgage interest rates, as well as the direction of the U.S. housing market, has weighed on mortgage services stocks in recent weeks.

IBD's Finance-Mortgage & Related Services group has fallen about 5% since establishing a five-and-a-half year high on Oct. 28. However, the group is still up about 29% for the year and ranks No. 31 of 197 industries tracked by IBD.

Leading stocks in the group include Ocwen Financial (OCN), Nationstar Mortgage Holdings (NSM) and CoreLogic (CLGX) .

Ocwen has an IBD Composite Rating of 94. Nationstar's is 68, while CoreLogic's is 90.

IBD's Building-Residential/Commercial industry group, which ranks No. 189, edged up fractionally Wednesday after rising nearly 2% Tuesday amid Census data showing a brisk pace for housing permits — though the strongest rise was for apartments.