Home Mortgage Applications Up For Week
U.S. mortgage applications rose for the fourth time in the past five weeks, in spite of a rise in long-term home loan rates to levels not seen since early February.
The Mortgage Bankers Association’s mortgage application index rose 1.6 percent to a seasonally adjusted 686.2 in the week ending May 18.
The mortgage application volume marked was the highest reading since the week of March 9 and is well above the level recorded in the same week a year earlier.
Applications for both home purchase loan and mortgage refinance activity climbed in the past week. Borrowing costs also rose across the board.
Average 30-year fixed-rate mortgages rose 0.10 percent to 6.23 percent from 6.13 percent the prior week, the biggest weekly increase this year.
While this jump in mortgage rates was just below the peak of 6.24 percent reached in the February 9 week, borrowing costs have held a narrow (and historically low) range of 6.03-6.29 throughout the year.
In the same week a year ago, 30-year mortgage rates averaged a much higher 6.61 percent. Meanwhile, 15-year loans, popular for mortgage refinancing, mirrored this trend.
The MBA’s seasonally adjusted purchase index climbed 1.3 percent to 438.1 in the week ended May 18. The group’s refinancing applications index rose 1.9 percent to a seasonally adjusted to 2,154.7.
New home sales figures on Thursday and existing home sales data on Friday will be carefully scrutinized by analysts and investors for clues on the state of the real estate market.
Many analysts say the historical tie between rising home loan applications and increasing home sales is beginning to loosen.
“Mortgage applications are probably being boosted by tighter lending standards, with applicants being rejected and reapplying,” UBS wrote in research before the MBA data were released.
While mortgage applications have been rising, home sales have been sluggish early in the spring selling season, when warm weather and the end of the school usually stimulate house shopping.
“One possibility, we think, is that marginal home buyers, that is, people who think they may not get a loan at all or at least a loan on acceptable terms, are making multiple applications in order to boost their chances,” added Ian Shepherdson, chief U.S. economist at High Frequency Economics.
SOURCE: Reuters