NEW YORK – Applications for U.S. residential mortgages rose last week as higher interest rates failed to deter borrowers from refinancing their existing home loans, an industry trade group said on Wednesday.
The Mortgage Bankers Association (search) said its index of total mortgage applications (search) for home purchase and refinancing loans rose 1.5 percent to 772.2 in the week ended September 16. The index fell 1.4 percent in the previous week.
The MBA's purchase index fell 2.6 percent to 500.3, reversing the previous week's 2.9 percent gain.
The refinancing index rose 7.0 percent to 2,353.7, more than offsetting the previous week's 6.7 percent loss.
The indexes were all seasonally adjusted, the MBA said.
Fixed 30-year mortgage rates (search) rose 9 basis points, or 0.09 of a percentage point, to an average of 5.81 percent, excluding fees, compared with 5.72 percent in the previous week.
The fixed 30-year mortgage rate, considered an industry benchmark, is still below its 2005 high of 6.08 percent, reached in late March. It is above its 2005 low of 5.47 percent, reached in late June; a year ago, the rate stood at 5.66 percent.
Fixed 15-year mortgage rates last week averaged 5.38 percent, up from 5.29 percent the previous week. Rates on one-year adjustable-rate mortgages (search) (ARMs) increased to 4.94 percent from 4.82 percent.
With ARMs, low initial payments allow borrowers to buy homes they may not be able to afford with a fixed-rate loan.
With fixed mortgage interest rates rising in recent weeks, demand for ARMs has been climbing in tandem. They accounted for 29.8 percent of total applications, up from 28.2 percent the previous week.
ARM demand reached a 2005 high of 36.6 percent in late March.
Refinancings also increased as a percentage of all mortgage applications, to 45.6 percent from 42.9 percent, the MBA said.
The group's survey covers about 50 percent of all U.S. retail residential mortgage originations. Respondents include mortgage bankers, commercial banks and thrifts.