Mortgage applications up, FHA index climbs more
NEW YORK (Reuters) - Applications for U.S. home mortgages edged higher last week, fueled by an increase in activity for government-backed loan programs, according to data published by an industry group on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity rose 5.4 percent to 725.6 in the week ended April 4. But the rise follows a steep decline in the previous week, and failed to inspire economists who expect falling home prices and tighter credit standards will continue to plague the mortgage market.
"With the ongoing, severe, dislocations in the credit market (applications) have become so volatile that there is not much information in a move this small," said economists at Goldman Sachs, in a research note.
Lower interest rates have buoyed refinancing efforts, keeping the overall index above levels of a year ago.
The MBA's index of refinancing applications last week rose 3.4 percent to 2,724.7, and its gauge of loan requests for home purchases climbed 8.1 percent to 384.7.
The sub-index of applications for loans backed by government programs such as the Federal Housing Administration and the Veterans Administration jumped by 12.9 percent last week, bringing the measure to 375.2, nearly three times the level of a year ago.
The MBA government index in mid-March reached 391.7, the highest level since June 2003, a MBA spokeswoman said.
Borrowers have increasingly looked to FHA programs in recent months after lenders that once courted them have now closed or severely tightened requirements for getting a loan. The government has expanded the reach of the FHA for homeowners facing foreclosure, and key lawmakers are lobbying to broaden the programs even more.
"The FHA is doing a massive business in refinancing non-FHA mortgages for borrowers who are current on their existing mortgage," analysts at UBS Securities wrote in a research note. The FHA Secure program that refinances borrowers facing foreclosure due to pending loan rate increases has seen little volume, however, they said.
Fixed 30-year mortgage rates averaged 5.78 percent in the week, up 0.03 percentage point from the prior week.
(Reporting by Al Yoon; Editing by Andrea Ricci)
