Americans filed more mortgage applications for a third straight week, as the trend of falling mortgage rates pushed weekly refinancing activity to a seven-month high, an industry trade group said on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted market index, a measure of weekly mortgage activity, rose for the week ending Feb. 27 by 2.8 percent to 878.7 from the previous week's 854.5. Last week's market reading was the highest since 916.1 for the week ending Jan. 16, which was the highest reading so far in 2004.
Average 30-year mortgage rates were unchanged last week from the prior week at 5.49 percent, while interest rates on 15-year mortgages and most adjustable-rate loans fell.
The Washington trade group's seasonally adjusted refinancing index increased 5.1 percent to 3,532.2 from previous week's 3,361.9. This barometer of refinancing activity reached its highest level since it hit 4,047.5 for the week ending August 1, 2003 when the average 30-year mortgage rates averaged 6.37 percent.
Economists and the Federal Reserve have said money from refinancings, which result from homeowners either "cashing out" home equity or switching into lower-rate loans, has been vital for consumer spending in supporting an uneven U.S. economy.
The group's purchase index, a gauge of new loan requests for home purchases, slipped 0.2 percent to 422.6 from 423.5 last week.
Mortgage demand reached an all-time high in 2003 on a record wave of refinancings, and has remained healthy by historical standards, reflecting the overall strength of the U.S. housing market.
U.S. home prices on average rose 8.4 percent in 2003 and grew at an annualized rate of 17.8 percent, the fastest quarterly pace in 26 years, Freddie Mac , the No. 2 buyer of U.S. mortgages, said on Tuesday.
Historically low mortgage rates, especially on variable-rate loans, have made home purchases affordable.
The average interest rates on one-year adjustable-rate mortgages are running more than 2 percentage points lower than those on 30-year fixed-rate home loans, according to the Mortgage Bankers Association.
The adjustable-rate mortgage share of last week's new applications increased to 28.8 percent from 27.1 percent the previous week.
