As banks tightened lending standards, prospective borrowers found it difficult to obtain loans, causing mortgage applications to hardly advance despite interest rates plummeting to their lowest levels since May, Reuters reported.

The seasonally adjusted index of mortgage applications increased only 0.03 percent from 656.3 the previous week to 656.5 for the week ending Oct. 19, the Mortgage Bankers Association said.

Data has been skewed in recent months because banks have tightened lending standards and potential borrowers have been filing numerous applications to get a loan, economists said.

Despite a decline in new home sales of more than 10 percent compared with 2006, overall mortgage applications increased 11.5 percent last week from the previous year.

Thirty-year fixed-rate mortgage borrowing costs averaged 6.21 percent, dropping 0.19 percentage point from the previous week. According to Mortgage Bankers Association data, that was the largest single-week fall for the rate in at least a year.