home loan demand rises
By Julie Haviv
NEW YORK, May 17 (Reuters) - U.S. mortgage applications rose last week, led by a sharp rise in home refinancing loans even as interest rates hit their highest in nearly four years, an industry trade group said on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity for the week ended May 12 rose 4.6 percent to 588.0 from the previous week's 562.1.
Celia Chen, director of housing economics at Moody's Economy.com, a consulting firm, attributed the increase in demand to last week's Federal Reserve meeting.
"Some of the people who were fence-sitters took out loans expecting that mortgage rates were going to rise after the Fed meeting," she said. "The index is seasonally adjusted, but I would say the Fed hike skewed it."
In its second meeting since Ben Bernanke took over as Fed chairman, the policy-setting Federal Open Market Committee raised its federal funds rate by a quarter-percentage point to 5 percent last week, as expected. It was the central bank's 16th straight hike since June 2004.
While mortgage rates are linked to long-term U.S. Treasury yields, higher short-term rates lead investors to recalibrate their long-term rate expectations.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.66 percent, up 0.05 percentage point from the previous week, its highest level since the week ended May 31, 2002, when it reached the same level.
The group's seasonally adjusted index of refinancing applications increased 8.4 percent to 1,546.8. A year earlier, the index stood at 2,036.7.
The refinance share of mortgage activity increased to 35.0 percent of total applications from 33.8 percent the previous week.
NEW YORK, May 17 (Reuters) - U.S. mortgage applications rose last week, led by a sharp rise in home refinancing loans even as interest rates hit their highest in nearly four years, an industry trade group said on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index
Celia Chen, director of housing economics at Moody's Economy.com, a consulting firm, attributed the increase in demand to last week's Federal Reserve meeting.
"Some of the people who were fence-sitters took out loans expecting that mortgage rates were going to rise after the Fed meeting," she said. "The index is seasonally adjusted, but I would say the Fed hike skewed it."
In its second meeting since Ben Bernanke took over as Fed chairman, the policy-setting Federal Open Market Committee raised its federal funds rate by a quarter-percentage point to 5 percent last week, as expected. It was the central bank's 16th straight hike since June 2004.
While mortgage rates are linked to long-term U.S. Treasury yields, higher short-term rates lead investors to recalibrate their long-term rate expectations.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.66 percent, up 0.05 percentage point from the previous week, its highest level since the week ended May 31, 2002, when it reached the same level.
The group's seasonally adjusted index of refinancing applications
The refinance share of mortgage activity increased to 35.0 percent of total applications from 33.8 percent the previous week.
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