US mortgage applications rose last week, largely reflecting a jump in demand for home refinancing loans as interest rates slid to a five-week low, data from an industry group showed on Wednesday. Applications for loans to buy a home, an early indicator of sales, rose for a third consecutive week.
The trend bodes well for the hard-hit US housing market, which has been showing nascent signs of stabilisation. The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended August 14 increased 5.6 percent to 527.0.
Low mortgage rates, high affordability and the government's $8,000 tax credit for first-time home buyers - part of the stimulus bill - have helped pave the way for stabilisation, he added. Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.15 percent, down 0.23 percentage point from the previous week.
It was the lowest since the week ended July 10, but above the all-time low of 4.61 percent set in the week ended March 27. The survey has been conducted weekly since 1990. Interest rates, however, were well below year-ago levels of 6.47 percent. The MBA's seasonally adjusted purchase index rose 3.9 percent to 277.7.
The four-week moving average of mortgage applications, which smooths the volatile weekly figures, dipped 0.1 percent. The Mortgage Bankers seasonally adjusted index of refinancing applications increased 6.9 percent to 1,982.5. The refinance share of applications increased to 53.3 percent from 52.3 percent the previous week, but remained significantly lower than the peak of 85.3 percent in the week ended January 9.
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