Mortgage applications nationwide rose last week, as demand for home purchase loans jumped even as interest rates edged up from record lows, data from an industry group showed on Wednesday.
Demand for home purchase loans, an indicator of home sales, far outweighed demand for refinancing. The increase may help gauge what is in store for the hard-hit housing market this spring, the peak home buying season.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended April 3 increased 4.7 percent to 1,250.6.
Cameron Findlay, chief economist at LendingTree.com, based in Charlotte, N.C., said home loan demand at his company has remained strong and steady over the last several weeks.
"In addition, the quality of the borrowers coming to us has remained high with high FICO scores and low loan-to-value ratios," he said on Tuesday. "This is an encouraging sign as responsible borrowers looking to purchase or refinance their homes are getting the help they need with low rate, high-quality loans."
FICO scores refer to borrowers’ credit ratings.
"As rates remain at historic lows, we anticipate this trend will continue as more borrowers take the time to shop around for competitive rates on home loans," he said.
Low mortgage rates have generated demand for home refinancing loans and should continue to do so. Lower monthly payments provide a bit of relief to strapped consumers amid rising unemployment and a shrinking economy.
Until last week, the low rates had only a moderate impact on demand for loans to buy homes.
The MBA’s seasonally adjusted purchase index rose 11.1 percent to 297.7.
The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was up 13.3 percent.
The Mortgage Bankers seasonally adjusted index of refinancing applications increased 3.2 percent to 6,813.5.
The refinance share of applications decreased to 77.9 percent from 79.1 percent the previous week. The adjustable-rate mortgage share of activity was unchanged at 1.5 percent.
Fixed 15-year mortgage rates averaged 4.49 percent, up from 4.45 percent the previous week. Rates on one-year ARMs increased to 6.23 percent from 6.20 percent.
