Mortgage applications up

easing forecast

March 20, 2005|By BLOOMBERG NEWS

Mortgage applications rose for the first time in five weeks as people bought homes and refinanced on expectations that interest rates will keep rising, an industry report showed.

The Washington-based Mortgage Bankers Association said its weekly gauge of mortgage applications increased 3.2 percent to 727.6 in the week that ended March 11 from 704.8 in the prior week.

"When consumers believe a serious change in direction has begun, the fence-sitters jump in," said Douglas Duncan, chief economist at the Mortgage Bankers Association.

Home sales will probably slow 7 percent this year to 7.42 million from a record 7.98 million in 2004, according to the bankers group. A decline in purchases and less refinancing will limit what has been a source of strength for the economy.

The gauge of refinancing applications rose 4.2 percent to 2,267.5 from 2,176.8, which was the lowest since Jan. 2.

The mortgage bankers' index of purchase applications rose 2.5 percent to 462.8, the highest since Dec. 24, from 451.7. The gauge reached a high of 501.6 in January of last year.

The share of refinancing as a percentage of all mortgage applications rose to 42.9 percent from 42.6 percent. The refinancing gauge has declined 77 percent since reaching a record in May 2003.

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