NEW YORK – New applications for U.S. mortgages rose last week on a rebound in refinancing demand, snapping five consecutive weeks of decline, the Mortgage Bankers Association (search) said on Wednesday.
The report underscored resilience in the housing sector, which has been under pressure from rising mortgage rates, analysts said.
The Mortgage Bankers Association said its seasonally adjusted market index, a measure of weekly mortgage activity, rose for the week ending June 11 by 5.6 percent to 600.6 from the previous week's 568.8.
"Mortgage applications are looking great in terms of demand," said David Seiders, chief economist at the National Association of Home Builders (search).
The Washington trade group's seasonally adjusted refinancing index increased by 8.5 percent, its biggest weekly percentage rise in three months, to 1,479.4 from previous week's 1,363.2.
The Washington trade group's purchase index, a gauge of new loan requests for home purchases, rose last week by 4 percent to 449.5 from 432.2 in the prior week.
The pickup in application volume occurred despite a rise in mortgage rates. Home borrowing costs have been climbing since March on expectations that the Federal Reserve (search) will raise short-term interest rates later this month to curb inflation.
On Tuesday, Fed Chairman Alan Greenspan (search), who appeared before Congress for his renomination of the Fed's top post, said that inflation is well contained and any rate hike by the Fed will be "measured." His comments helped to fuel a rally in the bond market and sent Treasury yields, benchmarks for mortgage rates, sharply lower.
Average 30-year mortgage rates, excluding fees, rose by 9 basis points to 6.34 percent. Last week's average 30-year rates were up 1.35 percentage points from the comparable week a year ago, the mortgage trade group said.
Last Friday, U.S. financial markets were shut for the funeral of former President Ronald Reagan. But many banks and mortgage lenders were open.
As a result, last week's loan application data did not warrant special adjustments, said Mickey Kalavsky, survey specialist at the Mortgage Bankers Association. "There were no additional seasonal adjustments made," he said.
"Things are in great shape. The tone of the market is very good," Seiders said.
While rising rates have curtailed refinancing activity, home sales and construction have slowed only slightly from their record highs.
In May, developers broke ground for single-family homes and apartment buildings at an annualized rate of 1.967 million units, down from April's upwardly revised rate of 1.981 million units, the Commerce Department (news - web sites) said.
The May reading was higher than the 1.95 million annualized units forecast by analysts polled by Reuters.
Building permits, a future predictor of builder sentiment, rose to 2.077 million annualized units in May, up from April's 2.006 million units. Analysts had predicted May permits to slip to an annualized rate of 1.970 million units.
On Tuesday, the National Association of Home Builders said its housing market index, based on survey of its members, was at 67 for June, down from May's 69 but up from 62 a year ago.