Mortgage Applications Up This Week

Mortgage applications rose last week, fueled by home purchase loan demand even as mortgage interest rates rose to their highest levels in nearly a year.

The Mortgage Bankers Association’s index of home loan applications, including both home purchase loans and refinancing, increased 1.1 percent to 626.2.

The four-week moving average of mortgage applications, a better gauge of trends than the volatile weekly figures, was down by 1.6 percent.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.65 percent, up 0.15 percent, the highest mortgage rates since the week ending July 21, 2006 (6.69 percent).

The modest rise in demand for home loans to buy real estate last week offset lower mortgage refinance activity.

The MBA’s seasonally adjusted purchase index, widely considered a timely gauge of home sales, rose 3.8 percent to 453.9. The index was above its reading a year earlier at 425.0.

The group’s seasonally adjusted index of mortgage refinancing applications decreased 3.0 percent to 1,636.9, its lowest since December 2006.

The mortgage refinance share of applications in the United States decreased to 36.2 percent from 37.8 percent the previous week.

Fixed 15-year mortgage rates, a popular option for people thinking about a home mortgage loan refinance, averaged 6.31 percent, up from 6.20 percent.

Rates on one-year adjustable-rate mortgages (ARMs), meanwhile, increased to 5.60 percent from 5.49 percent.

A home loan lender survey reports that the ARM share of mortgage loan activity decreased to 20.4 percent from 21.0 percent the previous week.

U.S. housing market indexes, in general, tend to be volatile. Recent data on home sales suggest a delayed recovery for the hard-hit sector.

The MBA’s survey covers about 50 percent of all U.S. retail residential loans. Respondents include mortgage banks, commercial banks and thrifts.

SOURCE: Reuters