New applications for U.S. mortgages jumped last week, as interest rates on 30-year mortgages fell below 6 percent for the first time since mid-April, an industry group said Wednesday.
The Mortgage Bankers Association said its seasonally adjusted market index, a measure of mortgage activity, climbed for the week ending July 2 by 19.5 percent to 687, its highest level in nearly two months, from the previous week’s 575.
Mortgage rates fell sharply last week, although the Federal Reserve raised short-term U.S. rates for the first time in four years amid signs of growing inflation. On Wednesday, Fed policymakers assured the bond market that they would be ”measured” in their approach in hiking rates.
Treasury yields, against which lenders set their loan rates, came under downward pressure two days later on data showing surprisingly weak U.S. job growth in June after several months of strong gains.
Thirty-year mortgage rates, excluding fees, averaged 5.96 percent, down 0.25 percentage point from previous week’s 6.21 percent. However, last week’s average 30-year rates were up 0.59 percentage point from the comparable week a year ago.
A rate decline should give a second chance to homeowners looking to refinance, and prospective home buyers who missed out on the low rates earlier this year.
The Washington trade group’s purchase index, a gauge of new loan requests for home purchases, rose last week by 15 percent to 500.9 from 435.4 in the prior week. The latest purchase reading is that index’s second highest level ever.
The Washington trade group’s seasonally adjusted refinancing index increased by 27.6 percent to 1,769.7 from previous week’s 1,386.9. The refinancing index was at its highest level since the week ending May 14 when it was at 1,816.9.
New applications for refinancing made up 35.8 percent of all new loan requests filed last week, up from prior week’s 33.4 percent, the group said.
