Home loan demand rose slightly last week

By Julie Haviv

NEW YORK (Reuters) – U.S. mortgage applications rose for a
second consecutive week, driven by increased demand for home
purchase loans as interest rates remained near a recent
four-year high, an industry trade group said on Wednesday.

The Mortgage Bankers Association said its seasonally
adjusted index of mortgage application activity for the week
ended July 7 increased 1.0 percent to 566.8 from the previous
week’s 561.0.

Borrowing costs on 30-year fixed-rate mortgages, excluding
fees, averaged 6.81 percent, up 0.01 percentage point from the
previous week. Interest rates were just 0.05 percentage point
below a four-year high reached two weeks prior.

The MBA’s seasonally adjusted purchase mortgage index,
considered a timely gauge of U.S. home sales, rose 2.6 percent
to 425.0. Even so, it stood well below its year-ago level of
489.0.

The group’s seasonally adjusted index of refinancing
applications decreased 1.6 percent to 1,400.5. A year earlier
the index stood at 2,554.3.

The refinance share of applications fell to 34.0 percent
from 35.0 percent the previous week.

Fixed 15-year mortgage rates averaged 6.40 percent, down
from 6.41 percent the previous week.

ADJUSTABLE RATES CLIMB

Rates on one-year adjustable-rate mortgages (ARMs)
increased to 6.41 percent from 6.39 percent.

The ARM share of activity decreased to 28.7 percent of
total applications from 29.5 percent the previous week.

Historically low mortgage rates have fueled a five-year
housing boom, helping support the U.S. economy’s recovery from
recession despite uncertain business investment.

While analysts differ on whether or not there is a housing
bubble, most agree that the market is cooling off from its
record run.

The MBA’s survey covers about 50 percent of all U.S. retail
residential mortgage loans. Respondents include mortgage
bankers, commercial banks and thrifts.