Development and construction continues on a large scale housing project of over 600 homes in Oceanside, California, U.S., June 25, 2018. REUTERS/Mike Blake

NEW YORK (Reuters) - U.S. loan applications to refinance existing homes fell to their lowest in over 17-1/2 years even as most 30-year home borrowing costs fell last week, data from the Mortgage Bankers Association showed on Wednesday.

The Washington-based industry group said its seasonally adjusted index on homeowners’ requests for refinancing fell 3.8 percent to 958.5 in the week ended July 6. This was the lowest weekly reading since December 2000.

Refinancing’s share of weekly mortgage activity fell to its lowest since August 2008 at 34.8 percent of total applications. This compared with 37.2 percent the previous week, MBA said.

Interest rates on 30-year fixed-rate “conforming” home loans, whose balances are $453,100 or less, averaged 4.76 percent from 4.79 percent the week before, it said.

However, the average rate on 30-year loans backed by the Federal Housing Administration, which are often used by first-time home buyers or borrowers with patchy credit, rose to 4.80 percent from 4.78 percent the prior week.

Interest rates on five-year adjustable-rate mortgages averaged 4.13 percent, the highest level since MBA began tracking this type of loans in January 2011.

Thirty-year mortgage rates generally fell in step with longer-dated U.S. bond yields last week, while adjustable-rate loan rates declined with higher shorter-dated bond yields.

Meanwhile, the MBA’s seasonally adjusted gauge on loan applications to buy a home, a proxy on future housing activity, increased 6.5 percent last week to 261.5. This was its strongest weekly level since the week of April 20.

The group’s seasonally adjusted barometer on total mortgage applications gained 2.5 percent to 372.6 last week.