UPDATE 2-U.S. mortgage applications rise. rates climb
Wed Nov 3, 2004 01:04 PM ET
(Recasts; adds economist, lender comments, byline)
By Julie Haviv
NEW YORK, Nov 3 (Reuters) - U.S. consumers are still clamoring for mortgages and seeking to refinance their home loans, despite an uptick in mortgage rates last week, an industry trade group said on Wednesday.
New applications for U.S. home loans rose last week to their highest level since late April, even as mortgage rates increased, the Mortgage Bankers Association reported.
Its seasonally adjusted market index, a measure of mortgage activity, rose by 8.2 percent to 761.7 for the week ended on Oct. 29 from the previous week's 703.9.
That is the highest level the index has reached in nearly six months. The index was at 780.9 for the week ending April 30.
Thirty-year mortgage rates, meanwhile, excluding fees, edged up 0.11 percentage point from the previous week, averaging 5.65 percent. That's because mortgage rates are dictated by Treasury yields, which rose last week on a combination of factors that included a surprise rate hike from China and weaker oil prices.
Mortgage rates, however, are still 0.20 percentage point lower than a year ago, the Washington trade group said.
"Interest rates are still low, but last week's increase in applications may be an indication to some fence sitters that rates are not going to go much lower from here," said David Resler, chief economist at Nomura Securities International.
Indeed, judging by Wednesday's action in U.S. Treasury securities, mortgage rates appear to be headed higher. Treasury yields rose on Wednesday on expectations that President George W. Bush would win a second term. Democratic Senator John Kerry conceded the presidential election in a phone call to Bush on Wednesday morning.
The MBA's purchase index, a gauge of new loan requests for home purchases, climbed by 12.6 percent last week to 496.5 from 440.9 in the prior week.
"With the uncertainty of the election out of the way, I am expecting rates to move higher from here," Resler said. "The housing market will start to cool off, but it will likely remain healthy."
The seasonally adjusted index on new refinancing applications jumped by 3.1 percent to 2,303.9 for last week from the previous week's 2,233.8.
"We saw a renewed interest in mortgage loans last week and our pipeline is growing," said Bob Walters, chief economist at Quicken Loans. "That has a lot to do with an increased awareness that rates are still low at favorable levels and the realization that the Federal Reserve is in a raising cycle now."
Last week was the third week in a row that the refinancing index has risen and it is now a stone's throw away from its year-ago level of 2,319.4. The refinance share of mortgage activity decreased to 45.7 percent of total applications from 47.7 percent the previous week.
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