Mortgage bankers' index rises 4.9 percent

Statistic sees climb for first time in 4 weeks

February 22, 2004|By BLOOMBERG NEWS

An index of U.S. mortgage applications rose last week for the first time in four weeks as interest rates dropped to their lowest since July of last year, an industry group report says.

The Mortgage Bankers Association's index climbed 4.9 percent to 837.1. The home purchase applications measure rose 2.9 percent to 413.9 and is close to the record it reached last month.

The average 30-year fixed mortgage rate dropped to 5.58 percent, the lowest since July. The National Association of Home Builders forecasts that home sales this year will be the second-highest on record, as an improving labor market and rising incomes underpin demand and the economy.

Home sales could total 6.9 million this year, second only to the record 7.19 million last year, according to the National Association of Home Builders.

The Commerce Department said U.S. housing starts fell to a 1.903 million-unit annual rate last month, as frigid weather and storms restrained building in parts of the country. Last month's pace followed a December rate of 2.067 million, the strongest since February 1984.

The MBA's index measuring applications to refinance homes rose 6.4 percent to 3,298.3. Refinancing helps boost consumer spending, which accounts for 70 percent of the economy, by putting more cash in the pockets of homeowners. The index has dropped since reaching a record of 9,977.8 on May 30.

The homeownership rate rose to a record 68.6 percent in the fourth quarter of last year, according to figures from the Commerce Department.

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