U.S. MBA mortgage applications index rises 5.6 percent
Mortgage applications in the U.S. rose last week as lower borrowing costs sparked purchases and refinancing.
The Mortgage Bankers Association's index of applications to purchase a home or refinance a loan increased 5.6 percent to 527 in the week ended Aug. 14, from 499 in the prior week. The group's refinancing gauge rose 6.9 percent, while a measure of purchases gained 3.9 percent.
Increased affordability is helping to bring in more buyers who can get credit, helping stabilize the market after the worst housing contraction in seven decades. Even so, a rebound may be slow to materialize as the number of homes on the market exceeds demand and prices fall further.
"We're still bouncing along the bottom," Joseph Brusuelas, a director at Moody's Economy.com in West Chester, Pennsylvania, said before the report. "We do think we're ready to turn the corner on housing."
The mortgage bankers' refinancing gauge increased to 1,982.5 from 1,853.8 the previous week, today's report showed. The purchase index rose to 277.7, the highest level in a month, from 267.2.
The share of applicants seeking to refinance loans rose to 53.3 percent of total applications last week from 52.3 percent.
The average rate on a 30-year fixed-rate loan decreased to 5.15 percent last week from 5.38 percent the prior week. The rate reached 4.61 percent at the end of March, the lowest level since the group's records began in 1990.
Monthly Payments
At the current 30-year rate, monthly borrowing costs for each $100,000 of a loan would be $546, or about $84 less than the same week a year earlier, when the rate was 6.47 percent.
The average rate on a 15-year fixed mortgage fell to 4.52 percent from 4.71 percent. The rate on a one-year adjustable mortgage dropped to 6.66 percent from 6.71 percent.
Other reports support projections that the housing market is stabilizing. Builders broke ground on more single-family homes for a fifth straight month in July, the Commerce Department said yesterday.
"We're likely not to experience a lot of downside from here, but it's quite possible that we could be operating in this tough environment for a while," Pulte Homes Inc. Chief Executive Officer Richard Dugas said Aug. 18. Pulte yesterday completed its purchase of Centex Corp., the first large combination of publicly traded homebuilders since the housing recession began.
Dugas said the $8,000 federal tax credit for first-time homebuyers "has been effective" and has a "reasonable chance" of getting extended.
The Washington-based Mortgage Bankers Association's loan survey, compiled every week, covers about half of all U.S. retail residential mortgage originations.