Reuters reports on the loan volume numbers. "U.S. mortgage applications fell last week to their lowest level this year despite a marked drop in interest rates, an industry trade group said on Wednesday. The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended March 17 decreased 1.6 percent to 565.0 from the previous week's 574.4, its lowest level so far this year."

"The group's seasonally adjusted index of refinancing applications decreased 0.6 percent to 1,574.5 compared to 1,583.6 the previous week. A year earlier the index stood at 1,894.4."

"The MBA's seasonally adjusted purchase mortgage index dropped 2.3 percent to 393.6 from the previous week's 403.0. The index was only a few points above its two-year low of 391.7 reached during the week ended February 10. The index was also below its year-ago level of 446.4. The index, considered a timely gauge of U.S. home sales, was also below its year-ago level of 446.4."

"Historically low mortgage rates have fueled a five-year housing boom, helping support the U.S. economy's recovery from recession despite uncertain business investment. Despite last week's rate drop, most analysts say that mortgage rates are on the rise. While they may differ on whether or not there is a housing bubble, most agree that the market is now cooling off from its record run."

The Canadians look at the trend. "The downdraft has been gentle, but the winds have finally shifted in favour of a cooling U.S. housing market, and worry about a slowdown in consumer spending is mounting. 'We knew that the market was flying too high for way too long,' economist Beata Caranci said."

"Ill omens have been building: Housing construction fell in February, the inventory of unsold homes has risen, and indicators of home-builder and home-buyer sentiment have turned down. As for mortgage applications, Ms. Caranci said the index has fallen a little less than 20 per cent since hitting a peak on June 10."

"That seems like a mild slip compared with refinancing activity, which has tumbled about 50 per cent since its peak last summer. Ms. Caranci said the more muted decline in mortgage applications is 'as positive as we can expect;' It means that the air is coming out of the U.S. housing market slowly, at least so far."

"Just as expected, Ms. Caranci said, numbers are declining faster in the U.S. West and Northeast, where economists saw more evidence of frothiness. A more significant harbinger will be tomorrow's report on existing home sales. While housing starts and mortgage applications tend to swing wildly, Ms. Caranci said that the much larger and less volatile resale market has certainly come off its peak."

"Ms. Caranci expects the downward trend in prices and transactions that have been seen for about five months will continue. Prices have remained more stubborn, but the number of homes changing hands has fallen markedly."

"Meanwhile, Merrill Lynch & Co. Inc. has been monitoring how the slowdown in the real estate market is influencing Wall Street. Executives at some of the big brokerages say revenue from mortgage bonds in that $6.9-trillion (U.S.) market is dropping as rising rates depress home sales. Moreover, Lehman Brothers is cutting nearly 200 jobs at two home-lending units in California."