US mortgage applications climbed for the third consecutive week, as the number of home owners looking to refinance their mortgages continue to soar from a one-year low.
The Mortgage Bankers Association’s index of mortgage applications rose five percent in the week ended 14 January. Purchase applications dropped to a two-month low, while the refinancing gauge climbed 7.7 percent, the highest level since early October.
Continued home price decreases and stricter lending standards have led to a sharp decline in purchase application in the past six weeks. The unemployment rate, which has been above nine percent for 20 months, needs to fall in order to restore housing demand.
“There’s going to be a very, very slow improvement in the housing market,” said Joshua Shapiro, Chief US Economist at Maria Fiorini Ramirez Inc.
“Against the back drop of home prices still coming down, the saving grace is an improvement in the labour market.”
The company’s purchase index fell 1.9 percent last week to its lowest level since November 12, while its refinancing index rose for the third week in a row.
The average 30-year fixed-rate mortgages fell to 4.77 percent last week, from 4.78 percent in the previous week, while 15-year average fixed-rate loans surged to 4.16 percent from 4.15 percent.