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May 2009
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Mortgage Loan Applications Increased as Interest Rates Rose

Bloomberg reported this week that mortgage loan applications in the U.S. gained last week, helped by affordable mortgage rates that enticed homeowners to seek mortgage refinancing. The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan rose 2.3% to 915.9 in the week ended May 15th, from 895.6 the week before. The group’s refinancing gauge increased 4.5%. The average rate on a thirty-year fixed mortgage loans fell for the second straight week and was near the record low reached at the end of March.

Lower borrowing costs, supported by an increase in Federal Reserve purchases of longer-term securities, and reduced prices are boosting mortgage rates for home refinancing and purchases of homes and may help settle the slumping housing market. “The broader housing market certainly looks to be stabilizing,” Zach Pandl, an economist at Nomura Securities International Inc. in New York, said before the report. “Home loan applications responded very well to the Fed’s purchases of Treasuries and mortgage-backed securities.” The mortgage bankers Association reported that their mortgage refinancing gauge rose to 4,794.4, from 4,588.6 the previous week. The purchase index fell 4.4% to 254 last week, from 265.7 the week before. The share of applicants seeking to refinance loans rose to 73.6% of total applications last week from 71.9%.