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By Lynn Adler
NEW YORK, March 3 U.S mortgage rates retreated
below 5 percent last week, propping up demand for home loans
after purchase applications sank to a nearly 13-year low in the
prior week, the Mortgage Bankers Association said on
February's volatile swings in housing demand came on the
heels of a steep January sales slump, blamed mainly on
unusually harsh winter weather.
The industry group's market index, which measures requests
for loans to buy homes and refinance, rose by a seasonally
adjusted 14.6 percent in the week ended Feb. 26 to the highest
level since mid-December.
Purchase applications increased 9 percent while refinancing
requests jumped 17.2 percent last week, as average 30-year
mortgage rates fell 0.08 percentage point to 4.95 percent.
"Mortgage applications rebounded last week, particularly
refis, as rates dropped back below 5 percent," Michael
Fratantoni, vice president of research and economics at MBA,
said in a statement. "Purchase activity remains subdued, with
application volumes remaining within the narrow range seen in
the last few months."
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Refinancing loans represented about 69 percent of all
applications last week.
The 30-year mortgage rate, which the industry group said
reached a record low of 4.61 percent almost a year ago, is seen
headed as high as 6 percent after the Federal Reserve ends its
$1.25 trillion in mortgage bond purchases on March 31. The
program is aimed at keeping rates low to revive housing and the
The road to stabilization has been riddled with potholes.
In January, sales of existing homes sank by more than 7
percent to the weakest level since June, and new home sales set
a record low.
Snow blasted most U.S. states, but the erratic sales pace
in recent months also stems from the fits and starts of the
$8,000 first-time home buyer tax credit.
The credit pulled sales forward last year, as buyers raced
to beat its November expiration. The incentive was ultimately
extended, and expanded with a $6,500 move-up buyer credit,
spurring a second wave of demand after a brief lull.
To get these incentives qualified borrowers need to sign
contracts by the end of April and close loans by the end of
(Editing by Jeffrey Benkoe)