Low borrowing costs spur 7-month high in refinancing activity


March 07, 2004|By Bloomberg News

Refinancing activity rose to its highest level in seven months last week as near-record low interest rates prompted more consumers to seek lower mortgage costs, an industry group said Wednesday.

The Mortgage Bankers Association's index of mortgage applications increased 2.8 percent to 878.7 last week, the highest since mid-January. The gauge of refinancing rose 5.1 percent to 3532.2, the highest level since the week that ended Aug. 1.

An index of purchase applications eased but stayed close to a record level. Cheap financing could help make this year's sales the second-best on record, economists said.

Refinancing helps boost consumer spending, which accounts for 70 percent of the economy, by putting more cash in the pockets of homeowners.

The measure of home purchase applications dipped 0.2 percent to 422.6. In January, the index rose to a record 501.6.

Sales of previously owned homes fell 5.2 percent in January, the National Association of Realtors said last month in Washington.

"The housing market remains strong, and we see no signs of a housing bubble. Any housing problem is more likely to be a shortage," Fannie Mae Chairman Franklin D. Raines, said last week.

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