United States mortgage applications rose last week with both new purchases and re-financings driven up by the lowest long-term home loan rates since early December, according to a report from the Mortgage Bankers Association.
The seasonally adjusted mortgage application activity index from MBA rose 2.8% in the week ended March 9 to 690.5, the highest reading since 721.2 in the week ended December 8. A year ago, the measure stood at 574.4 and 30-year loan rates were at 6.42%. Fixed 30-year mortgage rates excluding fees dipped 0.01% point last week to average 6.03%, the lowest since 5.98% in the week ended December 1, according to the MBA. MBA's seasonally adjusted purchase index, viewed as a timely gauge of U.S. home sales, gained 2.2% to 414.3. The industry group's seasonally adjusted refinancing applications index climbed 3.5% to 2,312.2 in the March 9 week. On a four-week moving average which smoothes volatility, the market index rose 2% to 648.7, the purchase index gained 0.9% to 400.6 and the refinance index increased 3.4% to 2102.8. On Tuesday MBA pushed back its prediction for a turnaround in U.S. housing, saying the industry would regain its footing near the end of the year instead of its December forecast of mid-year. While the U.S. economy and job markets were solid, home price gains slowed or prices fell in the fourth quarter, the MBA said. Subprime borrowers, or those with weak credit, are more vulnerable when home price appreciation fades and interest rates on their adjustable-rate loans jump. Troubles in subprime loans helped trigger the highest overall mortgage delinquency rates in 3-1/2 years, and the highest share of home loans entering the foreclosure process last quarter than at any time in the MBA's 37 years of conducting a national mortgage delinquency survey. The National Association of Realtors (NAR) on Tuesday also lowered its forecasts for home sales and construction, although the group still predicts a housing recovery this year.