American mortgage applications fell for the fourth time in the last five weeks, reflecting declines in home purchases and refinancing, a private group’s survey found.

The Mortgage Bankers Association gauge dropped 3.6% to 658.1 in the week ended January 21 from 682.9.The group’s purchase index fell 2% to 439 and the refinancing measure decreased 5.7% to 1932.8.

Both indexes are below last year’s averages and suggest the economy won’t get as much of a boost from refinancing and home sales in 2005 as it did in the prior two years.

“The housing market’s success in 2004 will partially impinge upon its potential success this year,” said the president of ClearView Economics LLC, Ken Mayland. “I see a very gradual reduction in activity.”

The mortgage bankers survey covers approximately 50% of all retail residential mortgage originations and has been conducted weekly since 1990.The base period is March 16,1990,when the value for all indexes was 100.

The average fixed rate on a 30-year mortgage as measured by the Mortgage Bankers Association fell to 5.58%, the lowest since the week ended October 22, from 5.64%.

At the current rate, borrowing costs for each $100,000 of a mortgage would be $572.82, compared with $536.21 when the rate was at an all-time low of 4.99% in June 2003. Thirty-year mortgage rates below 6% helped make 2004 a record year for home sales. Purchases of previously owned homes totaled an all-time high of 6.68 million, the National Association of Realtors reported yesterday. Existing homes account for about 85% of the market.

The Realtors group forecasts 2005 will be the second-strongest year for housing.

“Interest rates remain very attractive,” said Domenico Cecere, chief financial officer of KB Home, in an interview. Los Angeles-based KB Home is the seventh largest American homebuilder by market capitalization. “Prices have never gone down on new homes in the United States and that makes price appreciation an attraction more than a deterrent.”