NEW YORK – Overall applications for U.S. home loans rose last week, spurred by a rise in mortgage refinancings, as 30-year mortgage rates eased to their lowest since early April, an industry group said Wednesday.
The Mortgage Bankers Association's (search) seasonally adjusted market index, a measure of mortgage activity, rose 1.8 percent to 690.7 in the week to Sept. 17 from 678.2 the week before.
That gauge neared a four-month high of 692 set in the week ended Sept. 3, the MBA said.
The MBA's seasonally adjusted index on new refinancing applications rose for a third week, by 4.1 percent to 2,052.5 for last week from the previous week's 1,972.5.
However, the latest figure for the refinancing index remains below the year-ago's 2,429.7, and economists cautioned not to read too much into the recent rise.
"Refinancings peaked in the second quarter of 2003 and they were plummeting in the back half of 2003, so comparisons for refinancing activity are actually off a pretty deep decline," said Steven Wieting, senior economist at Citigroup in New York.
Mortgage rates bottomed out in June of 2003, and are not likely to ease to those levels any time soon, which will deter a return to the strong refinancings of last year, he said.
"You won't come close to the boom in refinancings that you saw in 2003 — we have fallen as much as 80 percent from that peak," Wieting said.
"It would take really unfavorable fundamentals for the U.S. economy — ones that are not necessarily positive (for) housing — to see those rates again," Wieting said.
The refinance share of mortgage activity rose to 44.5 percent of total applications last week from the prior week's 43.2 percent.
Thirty-year mortgage rates, excluding fees, averaged 5.66 percent last week, down 0.02 percentage point from the previous week and down 0.19 percentage point from a year ago, the Washington, D.C.-based trade group said.
The average 30-year rate is the lowest since late March.
The MBA's purchase index, a gauge of new loan requests for home purchases, rose last week by 0.2 percent to 456.6 from 455.7 in the prior week.
U.S. housing starts rose unexpectedly by 0.6 percent in August to their highest level in five months, a government report showed on Tuesday.
The number of housing starts climbed to a seasonally adjusted annual rate of 2.000 million units in August from an upwardly revised 1.988 million in July, the Commerce Department (search) said. Analysts polled by Reuters had been expecting August starts to ease to a pace of 1.935 million.
"The numbers still look very consistent with a growing housing market, but probably at a slightly slower pace," Wieting said.