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[Bullwinkle]

Rates move higher, and so do mortgage applications
2006-03-29 13:15 GMT

WASHINGTON (AFX) -- The volume of mortgage applications increased 1.2% in the week ended March 24 compared to the prior week, according to data compiled by the Mortgage Bankers Association. Also on a seasonally adjusted basis, week-to-week filings for mortgages to purchase homes rose 2.7%, but refinancing applications slipped 1.0%. Refinancings accounted for 37.3% of total applications, down from the prior week's 38.1%, while adjustable-rate mortgages reached 28.7% from 28.3%. Average contract interest rates on 30- and 15-year mortgages rose last week to 6.36% and 6.00%, respectively, from 6.31% and 5.99% a week earlier. One-year ARMs averaged 5.83%, up from 5.68%. Overall, the seasonally adjusted four-week moving average tracking mortgage activity was off 0.3%, the MBA said. On an unadjusted basis, overall mortgage activity was down 15.0% last week compared to a year ago.

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U.S. MBA Mortgage Applications Index Rose 1.2% Last Week
Courtney Schlisserman in Washington

March 29 (Bloomberg) -- A measure of U.S. mortgage applications rose last week, rebounding from the year's lowest level as home purchases increased.

The Mortgage Bankers Association's index of applications to buy a home or refinance an existing mortgage rose 1.2 percent to 571.7 from 565 a week earlier, the group said today. The gauge of purchase applications increased 2.7 percent to 404.1 the week ended March 24 from 393.6.

Mortgage applications rose for the first time in three weeks, suggesting consumers may be pursuing bargains with a record number of new homes on the market. Home sales are expected to fall this year for the first time since 2000, putting a weight on total economic growth.

``It's definitely more of a buyers market,'' Anthony Hsieh, president of Lending Tree.com in Charlotte, North Carolina, said in an interview before the report. ``Properties that are priced right and are good properties are moving pretty briskly.''

The average rate on a 30-year fixed mortgage increased to 6.36 percent last week from 6.31 percent a week earlier. That compares with an average of 6.4 percent since Jan. 1, 2000. At the current rate, monthly interest and principal costs would be $622.89.

``Mortgage rates have tipped higher but remain quite low,'' Stephen Malyon, an economist at Scotia Capital Inc. in Toronto, said before the report.

The average rate on a 15-year fixed mortgage rose to 6 percent the week ended March 24 from 5.99 percent. The one-year adjustable mortgage increased to 5.83 percent last week from 5.68 percent.

Fed Raises Rates

Adjustable-rate mortgages are becoming less attractive as the Federal Reserve raises short-term interest rates. Fed policy makers yesterday raised their benchmark interest rate for a 15th consecutive time, to 4.75 percent from 4.5 percent.

Higher mortgage rates and prices are making housing less affordable and will lead to a slowdown in sales this year, David Seiders, chief economist at the National Association of Home Builders, said in an interview on March 24.

``Demand is bound to be falling off,'' Seiders said. ``We have big downward adjustments in the standard measures of housing affordability.''

The Mortgage Bankers Association's measure of refinancing applications declined 1 percent to 1558.4 the week ended March 24 from 1574.5. Refinancing helped support consumer spending in recent years as homeowners used their new loans to turn some of the appreciated value of their homes into cash.

Refinancing

Cash extracted through refinancing may drop to $117 billion this year, from an estimated $243 billion in 2005, according to a report last month from Freddie Mac, the No. 2 buyer of mortgages. Consumer spending probably will cool to a 2.9 percent rate by the end of the year from the current quarter's 4.7 percent, according to a Bloomberg News survey of economists taken from Feb. 27 to March 7.

The share of total applications represented by refinancing fell to 37.3 percent last week, from 38.1 percent the week before. Adjustable-rate mortgages applied for rose to 28.7 percent of the total from 28.3 percent.

Sales of new and existing homes will fall 6.1 percent to a combined 7.85 million this year, the National Association of Realtors said on March 13. That level would still be the third- highest on record.

The Realtors group reported on March 23 that sales of previously owned homes rose last month as a warmer-than-average January brought more buyers into the market than is typical for that month. Existing sales track contract closings, which typically occur a month or two after a deal is made.

New Home Sales

Sales of new homes, which are a more current measure because they track contract signings, fell last month to a three-year low of 1.08 million at an annual rate, the Commerce Department said on March 24. The number of homes for sale rose to a record.

Lennar Corp., the third-largest U.S. homebuilder by stock market value, said yesterday fiscal first quarter new orders rose 3.5 percent, the smallest amount since the third quarter of 2004.

``There has been a slower sales pace in certain markets in which we operate and price appreciation in these markets has moderated relative to the appreciation experienced in the past few years,'' Lennar Chief Executive Officer Stuart Miller said in a statement.

U.S. home prices rose 13 percent in the fourth quarter from a year earlier, the Office of Federal Housing Enterprise Oversight said on March 1. The median U.S. new-home price probably will rise 5.4 percent this year and existing home prices will increase 5.8 percent, the National Association of Realtors forecast.

The Mortgage Bankers Association's survey covers about half of all U.S. retail residential mortgage originations and has been compiled every week since 1990.

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