Mortgage applications increase

Gauge of loan demand was up 1.8% last week

September 26, 2004|By BLOOMBERG NEWS

The number of applications for mortgages increased last week as the lowest borrowing costs since March helped boost home purchases and refinancing, a private survey found.

The Mortgage Bankers Association's gauge of loan demand rose 1.8 percent to 690.7 from 678.2, the Washington-based group said. The index of home purchase applications increased 0.2 percent to 456.6, close to the record of 501.6 reached in mid-January. The refinancing measure rose 4.1 percent to 2,052.5.

The average rate on a 30-year fixed mortgage has remained below 6 percent for much of the year. Cheap borrowing costs and an improving job market are helping sustain housing demand, which has bolstered the economy the past few years, economists said.

"The outlook for housing remains quite bright in light of the continued low mortgage rates and the expanding economy," said Peter Kretzmer, a senior economist at Banc of America Securities in New York.

Applications to refinance loans made up 44.5 percent of all mortgage business last week, up from 43.2 percent the week before, according to the group. The share of applications for adjustable-rate mortgages nudged up to 33.1 percent from 33 percent.

Housing construction accounts for about 5 percent of the economy. Housing starts in August rose 0.6 percent to a 2 million annual rate, matching the strongest pace of the year, Commerce Department figures showed Tuesday.

The government's report also showed construction permits, a sign of future activity, dropped 5.5 percent.

The mortgage bankers survey covers about 50 percent of retail residential mortgage originations.

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