The number of US mortgage applications surged last week, as demand for home loan purchases increased for the first time in five weeks, according to the Mortgage Bankers Association (MBA).
Meanwhile, demand for refinancing loans reached the highest level in 14 months, as interest rates hit its lowest level in nearly 20 years.
The MBA said that index for seasonally adjusted mortgage applications, which include refinance and purchase loans, jumped 7.6 percent last week. It added that the average rate for 30-year fixed mortgages, excluding fees, dropped 0.10 percentage point to 4.59 percent, the lowest level recorded since the survey started in 1990.
“The strength in purchase applications comes from government loans, likely indicating that prospective buyers are drawn by the lower downpayment requirements,” said Michael Fratantoni, vice president of research and economics at the MBA.
While seasonally adjusted demand fell 42 percent since the homebuyer tax credits expired, seasonally adjusted purchases rose 3.4 percent following a 13-year low in the preceding week.
The housing market is finding a way to bottom out after the tax credits expire, said Dean Maki, chief US economist at Barclays Capital. “The tax credits made things a lot more choppy.”
“We will continue to see a payback from the tax credits through the next few months and then we will return to a gradual upward trend. …,” he said. “We are expecting a continued gradual improvement in the labor market and that will also lend support to the housing market going forward.”
The fixed 15-year mortgage rates averaged 4.05 percent, down from last week’s 4.12 percent, while rates on one-year adjustable-rate mortgages (ARMs) was 7.17 percent, down from 7.20 percent.