Mortgage Applications Increase Last Week

Mar 16, 2005 — NEW YORK (Reuters) - Applications for U.S. home mortgages increased last week, as purchasing and refinancing activity rose despite sharply higher interest rates on fixed loans, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity increased 3.2 percent to 727.6 in the week ended March 11, after dropping 0.7 percent the week before.

Lower interest rates on adjustable-rate mortgages may have countered the impact of significantly higher rates on fixed loans, economists said.

Fixed 30-year mortgage rates averaged 5.91 percent last week, excluding fees, up 22 basis points from 5.69 percent the previous week.

At the same time, one-year ARM rates decreased to 4.19 percent from 4.43 percent the prior week.

The MBA's ARM index climbed 9.6 percent to 5169.9 from 4717.3 one week earlier.

"The ARM index increased almost 10 percent last week while fixed rates jumped almost a quarter of a point. The ARM index is now at its highest level since mid-December 2004," Michael Cevarr, MBA's director of member surveys, said in a press release.

ARM applications also rose as a percentage of all mortgage applications, climbing to 32.4 percent from 30.5 percent one week earlier.

The MBA's seasonally adjusted index of refinancing applications rose 4.2 percent to 2267.5, after falling 4.6 percent the prior week.

Refinancings also increased as a percentage of all mortgage applications, rising to 42.9 percent last week, from 42.6 percent the previous week.

The MBA's purchase index, a gauge of loan requests for home purchases, increased 2.5 percent to 462.8, adding to the 2.7 percent gain the previous week.

The purchase index has increased for the third consecutive week and is currently at its highest point of the year.

The MBA's survey covers approximately 50 percent of all U.S. retail residential mortgage originations, and has been conducted weekly since 1990.

Respondents include mortgage bankers, commercial banks and thrifts.