Applications for mortgages rise on rate dip


December 21, 2003|By Bloomberg News

An index of U.S. mortgage applications rose for the first time in three weeks as lower interest rates helped spur more purchases and a rebound in refinancing, an industry group said.

The Mortgage Bankers Association's index of applications increased 12.6 percent in the week that ended Friday. The refinancing index jumped 16.8 percent. The group's purchase index climbed 9.4 percent.

The average 30-year fixed mortgage rate slipped to 5.82 percent from 5.88 percent, according to Freddie Mac. Low borrowing costs and an improving labor market may underpin housing demand, which has been bolstering the economy.

Mortgage rates remain low, the economy and consumer confidence are improving and people are still out there buying new homes, said Joel Naroff, president of Naroff Economic Advisors in Holland, Pa.

The mortgage bankers' purchase index remains close to the record reached in May. Fannie Mae, the largest U.S. mortgage buyer, last week raised its forecast for U.S. home sales, saying low mortgage rates and an accelerating economy may result in a record number of purchases this year and possibly next.

Robert Toll, chief executive of Toll Brothers Inc., builder of luxury houses, said rising interest rates may not put the brakes on housing demand.

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