NEW YORK – U.S. mortgage applications rose last week, reflecting an increase in loan refinancing, as interest rates surged to a three-month high, an industry trade group said on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended March 3 increased 0.7 percent to 575.6 from the previous week's 571.5.
"The main story on applications versus rates is that the bulk of the rate increase was Friday and most of the applications were spread across the week, so we will probably see the impact in next week's numbers," said Douglas Duncan, chief economist at the MBA.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.31 percent, up 0.13 percentage point from the previous week, its highest level since the week ended December 2, 2005, when it hit 6.32 percent.
The 30-year fixed-rate mortgage, the industry benchmark, was substantially above its 2005 low of 5.47 percent in late June 2005, and only 0.02 percentage point below last year's high of 6.33 percent in the week of November 11.
The group's seasonally adjusted index of refinancing applications increased for a second consecutive week. It rose 2.6 percent to 1,614.4 compared to 1,573.5 the previous week.
The MBA's seasonally adjusted purchase mortgage index fell for a second consecutive week; it slid 0.4 percent to 399.0 from the previous week's 400.8. The index, considered a timely gauge of U.S. home sales, was also below its year-ago level of 451.7.
Fixed 15-year mortgage rates averaged 5.97 percent, up from 5.84 percent the previous week. Rates on one-year adjustable-rate mortgages (ARMs) increased to 5.69 percent from 5.64 percent.
Analysts say an increasing number of borrowers have been converting their ARMs into new fixed-rate loans as the difference between adjustable and fixed mortgage interest rates narrows.
The MBA's survey covers about 50 percent of all U.S. retail residential mortgage originations. Respondents include mortgage bankers, commercial banks and thrifts.