U.S. mortgage applications rise as rates ease Wed Jun 8, 2005 07:07 AM ET
NEW YORK, June 8 (Reuters) - Applications for U.S. home mortgages increased last week boosted by a rise in purchasing and refinancing activity as mortgage rates eased, an industry group said on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity increased 6.5 percent to 755.5, offsetting the previous week's 2.8 percent loss.
The MBA's seasonally adjusted index of refinancing applications climbed 10.3 percent to 2362.1, after dropping 1.2 percent the prior week.
The MBA's purchase index, a gauge of loan requests for home purchases, rose 3.6 percent to 479.3, after falling 4.1 percent the previous week.
"With the 30-year fixed-rate mortgage rate declining to 5.55 percent, the refinance share of applications has increased to 42.9 percent, a level last seen in March of this year," Michael Fratantoni, senior director of single-family research and economics at the MBA, said in a press release.
According to the MBA, fixed 30-year mortgage rates averaged 5.55 percent last week, excluding fees, down 6 basis points from 5.61 percent the previous week. Rates are lower than early April, when the fixed 30-year mortgage was at 5.91 percent.
Interest rates also are much lower than a year ago. The fixed 30-year mortgage rate as of June 4, 2004 was 6.25 percent, according to MBA data.
The average contract interest rate for 15-year fixed-rate mortgages remained at 5.13 percent last week.
Rates on one-year adjustable-rate mortgages, or ARMs, remained at 4.09 percent.
Lower rates have spurred more refinancings out of ARMs and into fixed-rate loans, analysts say.
And despite steady rates, demand for ARMs fell last week. Applications for ARMs fell to 31.7 percent of total applications from 33.3 percent the previous week, the MBA said.
Refinancings, however, increased as a percentage of all mortgage applications, at 42.9 percent of total applications, from 41.2 percent the previous week.
Low mortgage rates have supported the housing sector, generating economic growth in recent years. Industry analysts and economists have said they expect home sales to edge off the record 2004 levels as the Federal Reserve raises interest rates, but there has been little sign that demand has weakened.
Federal Chairman Alan Greenspan will give testimony on the economy before the Joint Economic Committee of Congress on Thursday, which may shed light on the Fed's monetary policy.
The MBA's survey covers approximately 50 percent of all U.S. retail residential mortgage originations. It has been conducted weekly since 1990.
Respondents include mortgage bankers, commercial banks and thrifts.
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