US mortgage applications rise as rates tumble-MBA

NEW YORK, Sept 12 (Reuters) - U.S. mortgage applications rose for a second straight week as benchmark interest rates on home loans tumbled to their lowest since May, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ended Sept. 7 increased 5.5 percent to 657.4.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.25 percent, down 0.17 percentage point from the previous week, their lowest since the week ended May 18 when they stood at 6.23 percent.

Yields on benchmark 10-year U.S. Treasury notes, which are linked to mortgage rates, dropped substantially last week on raised expectations of a rate cut from the Federal Reserve. The next Fed policy-making meeting is scheduled for Sept. 18.

The MBA's seasonally adjusted purchase index rose 5.2 percent to 448.0. The purchase index is considered a timely gauge of U.S. home sales.

The group's seasonally adjusted index of refinancing applications increased 6 percent to 1,876.6.