Mortgage applications increase is sharpest in almost a year

Bloomberg News

WASHINGTON -- Mortgage applications in the U.S. rose last week by the most in almost a year, the Mortgage Bankers Association said Wednesday.

The group's index of mortgage applications jumped 17 percent, to 887. That's the largest increase since the week ended July 2, 2004, and the highest level since the week ended April 2, 2004.

Home sales "could be a record this year," said Tim Rogers, chief economist at Briefing.com in Boston. "I don't expect a real strong upturn in [interest] rates, and I expect that to keep the housing sector booming."

The group's gauge of applications to purchase homes rose 10 percent, to 529, the highest on record. The index of applications to refinance existing loans surged 26 percent, to 2,967, the highest since the week ended April 2, 2004. The index is twice as high as it was a year ago.

A separate report showed optimism among home builders rose this month to its highest level of the year. The National Association of Home Builders/Wells Fargo index of builder confidence increased to 71 from 70 in May.

"We've sold out into the second quarter of next year," said Joel Rassman, chief financial officer of Toll Brothers Inc., a luxury home builder based in Horsham, Pa.

Rassman said the company is seeing greater demand from consumers wanting to move up and from Baby Boomers looking for a second or third home.