US mortgage applications rise on refinancing -MBA

NEW YORK, Oct 15 (Reuters) - U.S. mortgage applications rose for a second consecutive week, reflecting a jump in demand for home loan refinancing even as interest rates surged, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications USMGM=ECI, which includes both purchase and refinance loans, for the week ended Oct. 10 increased 5.1 percent to 489.3.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.47 percent, up 0.48 percentage point from the previous week.

Interest rates were above year-ago levels of 6.40 percent.

"Treasury yields were extremely volatile last week. The yield on the 10-year Treasury note -- the benchmark for 30-year fixed mortgage rate -- moved up about 40 basis points over the course of the week," Orawin Velz, the MBA's associate vice president of economic forecasting, said in a statement.

"Lower yields earlier in the week appeared to have spurred refinance activity, which then faded as the week went on and rates began to rise." she said.

The MBA's seasonally adjusted purchase index USMGPI=ECI fell 0.3 percent to 313.5. The index came in well below its year-ago level of 429.1, a drop of 26.9 percent.

Overall mortgage applications last week were 25.4 percent below their year-ago level. The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was down 7.9 percent.

WEEKLY REFINANCING ACTIVITY JUMPS

The group's seasonally adjusted index of refinancing applications USMGR=ECI jumped 12.5 percent to 1,514.2. The index was down 23.6 percent from its year-ago level of 1,980.9.

The refinance share of applications increased to 46.4 percent from 43.4 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 2.6 percent, up from 2.3 percent the previous week.

Fixed 15-year mortgage rates averaged 6.17 percent, up from 5.71 percent the previous week. Rates on one-year ARMs increased to 6.67 percent from 6.60 percent.

The MBA's report precedes separate data this week gauging the U.S. housing market, currently suffering the worst downturn since the Great Depression.

The National Association of Home Builders on Thursday will release its October NAHB/Wells Fargo Housing Market Index.

The Commerce Department on Friday will release September data on U.S. housing starts.

While U.S. housing market indexes tend to be volatile, data from the MBA may help gauge how the hard-hit sector is faring. (Reporting by Julie Haviv; Editing by Leslie Adler)