WASHINGTON - Mortgage applications increased as people took advantage of a drop in borrowing costs to buy homes and refinance existing loans, a private survey showed.
The Mortgage Bankers Association's index of mortgage applications rose 5.9 percent to 712.4 in the week that ended April 22 from 672.6. The group's measure of home purchases increased 3.3 percent to 482, the highest since Dec. 24.
The mortgage bankers group's gauge of applications to refinance existing mortgages rose 9.8 percent to 2052.5 from 1870 the week before.
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.
The average rate on a 30-year fixed mortgage fell to 5.75 percent in the week, the lowest in seven weeks, from 5.83 percent, the bankers group's figures showed. It reached a low this year of 5.48 percent in February.
At that rate, monthly borrowing costs for every $100,000 of a loan would be $583.57. That compares with $536.21 when the rate was at an all-time low of 4.99 percent in June 2003.
"Lower mortgage rates now just mean continued near-term strength in housing," said John Shin, an economist at Lehman Brothers Inc. in New York. "In the longer term, we see housing prices and sales coming down." The market will start to "bruise" when the average 30-year rate reaches the mid-7 percent range, Shin said.
Refinancing's share of all mortgage applications rose to 39.3 last week from 38 percent, according to the Mortgage Bankers Association. A year ago, the share was 50.4 percent.
