Mortgage applications rebound from low

Index reflects increase in refinancing, buying

December 11, 2005|By BLOOMBERG NEWS

WASHINGTON -- An index of mortgage applications rebounded from the lowest level since January, reflecting increases in refinancing and home purchases, a private group's survey showed.

The Mortgage Bankers Association's measure of applications rose 5.2 percent to 656.7 in the week that ended Dec. 2, from 624.1 in the week that included the Thanksgiving Day holiday. The group's gauge of purchases increased to the highest level since mid-October.

Rising mortgage rates might be persuading people to buy homes now in anticipation of even higher borrowing costs next year, economists said. The average 30-year fixed rate would have to rise to more than 7.5 percent for housing to falter, said Bob Walters, chief economist at Quicken Loans.

"Interest rates are very, very low, and as long as that's the case it's unlikely that housing will" slump, Walters said. "There are going to be some natural effects weighing on housing like higher prices pricing people out of the market."

The mortgage bankers group's purchase index rose to 495.1, the highest since the week that ended Oct. 14, from 476.2 the week before. The refinancing gauge increased 7.6 percent to 1,596.4 from 1,484.3.

The share of applications for adjustable-rate mortgages rose to 33.1 percent from 33 percent a week earlier. Those for refinancing increased to 41 percent from 39.1 percent.

The Mortgage Bankers Association survey covers about half of all U.S. retail residential mortgage originations and has been compiled every week since 1990.

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