U.S. MBA's Home Purchase Index Rose to Record Last Week
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U.S. MBA's Home Purchase Index Rose to Record Last Week
By Carlos Torres
Washington, May 8 (Bloomberg) -- Applications for loans to buy houses rose to the highest on record last week and refinancing increased as mortgage rates dropped to the lowest in six months, a private survey showed.
The Mortgage Bankers Association of America's purchase index, a gauge of housing demand, rose 3.9 percent to 382.7 in the week that ended Friday from 368.4 the prior week. That surpassed the previous record of 375.9 reached in the first week of January, a month in which a record number of previously owned homes were sold.
The group's refinancing index surged 14.1 percent to 1749.9, the fourth straight increase and the highest in two months, from 1533.5. Refinancing lets homeowners use their houses as a source of cash and has helped underpin consumer spending as the economy rebounds from recession.
The increases in purchases and refinancing propelled the group's overall market index up 8.1 percent to 583.2, the fifth straight rise, from 539.3. Lower interest rates may have fueled the advance. The average rate on a 30-year mortgage fell to 6.66 percent last week, the lowest since November. That compares to a rate of 6.36 percent in October 1998 that was the lowest in the group's 10 years of record keeping.
``Interest rates in effect are running a sale on housing,'' said Robert Toll, chief executive officer of Toll Brothers Inc., the largest U.S. builder of luxury homes, in an interview yesterday.
The yield on the benchmark 10-year Treasury note, to which many fixed-rate residential mortgages are tied, has fallen almost a quarter point since Alan Greenspan, chairman of the Federal Reserve, said the economy's recovery was uncertain during testimony to Congress on April 17.
Last week's 30-year rate puts the average principal and interest payment on a $100,000 mortgage at $642.63. The payment was $665.97 a year ago, when the rate was 7.01 percent.
The mortgage bankers' survey measures applications against a base level of 100 set in the week ended March 16, 1990. The survey covers about 40 percent of the U.S. residential mortgage market. |
