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Mortgage Applications Rise For First Time in Weeks

ServicesSource: Reuters

U.S. mortgage applications rose the first time in three weeks, fueled by a jump in demand for refinancing and home purchase loans as interest rates dropped, an industry group said Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ended May 2 soared 15.6 percent to 655.4.

U.S. housing market indexes tend to be volatile.

But last week's increase in mortgage demand may indicate what is in store for the hard-hit sector this spring, which is traditionally the peak of the home-buying season.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.91 percent, down 0.10 percentage point from the previous week.

Interest rates were also below year-ago levels of 6.10 percent.

The MBA's seasonally adjusted purchase index climbed 12.1 percent to 381.3.

But the index came in well below its year-ago level of 438.3.

Refinancing Soars

The group's seasonally adjusted index of refinancing applications surged 19.3 percent to 2,273.8.

Consumers seeking to refinance their existing home loans tend to be highly sensitive to shifts in interest rates.

The refinance share of applications increased to 47.1 percent from 45.7 percent the previous week.

The adjustable-rate mortgage (ARM) share of activity increased to 6.8 percent, up from 5.9 percent the previous week.

Fixed 15-year mortgage rates averaged 5.49 percent, down from 5.53 percent the previous week.

Rates on one-year ARMs dipped to 6.77 percent from 6.86 percent.

The MBA's report precedes separate data this week gauging the state of the U.S. housing market.

The National Association of Realtors Pending Home Sales Index will be released later on Wednesday.

The index, a key gauge of future home sales activity, tracks signed contracts, not closed, and is influenced by changes in mortgage rates.

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