Applications for mortgages increase again

Gauge signals biggest rise in home buying in months

April 17, 2005|By BLOOMBERG NEWS

WASHINGTON - Mortgage applications increased for the second time in three weeks, reflecting the biggest rise in home purchases since January, an industry report showed.

The Washington-based Mortgage Bankers Association said its gauge of mortgage applications rose 6.1 percent to 683.6 in the week that ended April 8 from 644.5. The group's purchase index jumped 6.4 percent to 474.5 from 446, the biggest percentage gain since the week ended Jan. 14.

Forecasts for higher mortgage costs as the Federal Reserve keeps raising its benchmark interest rate may be encouraging prospective buyers to purchase now, economists said.

"The MBA purchase index has held up remarkably well in the face of rising borrowing costs, perhaps due to a rush by potential homebuyers to lock in a low rate before costs move higher," said Stephen Stanley, chief economist at RBS Greenwich Capital in Greenwich, Conn.

The bankers group's gauge of applications to refinance existing mortgages rose 5.6 percent to 1,899.6 from 1,798.8 the previous week.

The most recent pending sales report from the National Association of Realtors showed still-strong housing demand, with contracts to purchase previously owned homes up 2.2 percent in February.

Housing "remains on solid ground for now," said Michael Moran, chief economist at Daiwa Securities America Inc. in New York. The pending sales report "suggests that activity will not falter in the near term."

The mortgage bankers' survey covers about 50 percent of all retail residential mortgage originations and has been conducted weekly since 1990. The base period is March 16, 1990, when the value for all indexes was 100.

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