U.S. MBA’s Mortgage Applications Index Increased 11% Last Week

March 11 (Bloomberg) -- Mortgage applications in the U.S. increased last week, led by a rebound in refinancing as borrowing costs dropped.The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan rose 11 percent to 723.4 in the week ended March 6, from 649.7 the prior week.

 The group’s refinancing gauge jumped 13 percent and its purchase index gained 7.1 percent.Homeowners are seizing on the opportunity to lower monthly mortgage payments as the jobless rate climbs and financial markets slump. Still, record foreclosures are adding to the glut of properties on the market and depressingproperty values, indicating sales are likely to slow further as prospective buyers wait for cheaper home prices.“We’re not seeing any underlying pickup in demand for homes,” said Sal Guatieri, a senior economist at BMO Capital Markets in Toronto. 

Government efforts to stem foreclosures “may help cushion the housing slump, but they won’t yet spur a recovery.”The mortgage bankers’ purchase index increased to 253.3 last week from 236.4 a week earlier. The index reached an eight-year low of 235.9 in the first week of February. The refinancing gauge rose to 3470.7 from 3063.4.The average rate on a 30-year fixed-rate loan slid to 4.96 percent from 5.14 percent the prior week, the report showed. It reached a record-low 4.89 percent in early January.Lower PaymentsAt the current 30-year rate, monthly borrowing costs for each $100,000 of a loan would be about $534, or $89 less than the same week a year earlier, when the rate was 6.36 percent.

Today’s report also showed the average rate on a 15-year fixed mortgage decreased to 4.54 percent from 4.73 percent the prior week, while the rate on a one-year adjustable mortgage increased to 6.21 percent from 6.13 percent.The share of applicants seeking to refinance loans jumped to 67.9 percent of total applications last week, from 66.9 percent.

President Barack Obama’s administration has pledged $275 billion to keep as many as 9 million borrowers in their homes. Steps include a tax break of up to $8,000 for first-time homebuyers that wouldn’t require repayment.Builders continue to struggle.

 Hovnanian Enterprises Inc., New Jersey’s largest homebuilder, yesterday reported its 10th consecutive quarterly loss as joblessness grew and prospective buyers waited for bargains.The Washington-based Mortgage Bankers Association’s loan survey, compiled every week since 1990, covers about half of all U.S. retail residential mortgage originations.

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