Posted on 07 Oct 2009
Mortgage applications in the U.S. rose last week to the highest level since May as near record-low borrowing costs boosted refinancing and sent purchases to a 10-month high.
The Mortgage Bankers Association's index of applications to purchase a home or refinance a loan jumped 16 percent to 756.3 in the week ended Oct. 2 from 649.6 in the prior week. The group’s gauge of refinancing surged 18 percent and its measure of purchases climbed 13 percent.
Lower home prices, falling mortgage rates and tax credits to first-time buyers have shored up sales, helping stabilize the housing-market slump that precipitated the financial crisis. Mounting job losses and foreclosures are a reminder that a recovery, in both housing and the economy, will be slow to develop.
“The bottoming process in the housing market is under way,” said Michelle Meyer, an economist at Barclays Capital Inc. in New York. “Residential investment should serve as a positive contribution to growth” in the third quarter.
The mortgage bankers’ purchase index increased to 306.1 last week, the highest level since January, from 270.4 the previous week, today’s report showed. The refinancing gauge jumped to 3,377.1, the highest level since May, from 2,857.3.