(Corrects the year-ago level on 30-year mortgages in 10th
By Julie Haviv
NEW YORK Jan 14 U.S. mortgage applications
jumped in the first full week of 2009 as record low interest
rates spurred the greatest demand for home refinancing loans in
over 5-1/2 years, data from an industry group showed on
Low mortgage rates, however, have yet to fuel demand for
loans to purchase homes.
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
Jan. 9 increased 15.8 percent to 1,324.8, the highest reading
since the week ended July 11, 2003, when it reached 1,358.2.
Thirty-year mortgage rates have dropped dramatically since
the Federal Reserve unveiled a plan in late November to buy as
much as $500 billion of mortgage securities backed by Fannie
Mae FNM.P FNM.N, Freddie Mac FRE.PFRE.N and Ginnie Mae.
The program also entails buying up to $100 billion of debt
issued by Fannie Mae, Freddie Mac and the Federal Home Loan
The refinance share of applications increased to 85.3
percent from 79.8 percent the previous week, the highest level
since the MBA started conducting its survey in 1990.
Spencer Rascoff, chief operating officer at Zillow.com, an
online real estate service company based in Seattle, said loan
requests to his company are up more than 200 percent from just
two months ago, with loan requests on pace to hit about 25,000
in January and loan quotes on pace to hit 200,000.
"Many experts agree that rates will stay relatively low for
at least the next few months since the federal government is
now committed to buying mortgage-backed securities to keep
borrowing costs low," Rascoff said on Tuesday.
"But the future of rates isn't certain, so locking in these
low rates now is a smart move," he said.
Borrowing costs on 30-year fixed-rate mortgages, excluding
fees, averaged 4.89 percent, down 0.18 percentage point from
the previous week, the lowest level recorded in the MBA's
Interest rates were well below year-ago levels of 5.62
"Our business has definitely increased dramatically in the
past few weeks with rates dropping," Melissa Cohn, chairman and
chief executive CEO of Manhattan Mortgage Company in New York,
said on Tuesday.
Cohn said the telephones at her company have been ringing
off the hook and while the company has not hired additional
staff, it has retained as many people as possible.
"We are just working twice as hard to handle the increased
volume," she said.
Meanwhile, though, the MBA's seasonally adjusted purchase
index USMGPI=ECI fell 14.1 percent to 295.8. The four-week
moving average of mortgage applications, which smooths the
volatile weekly figures, was up 10.8 percent.
WEEKLY REFINANCING ACTIVITY SURGES
The prospect of affordable home financing has provided a
glimmer of hope for the U.S. economy with the housing market in
the worst downturn since the Great Depression.
The Mortgage Bankers seasonally adjusted index of
refinancing applications USMGR=ECI jumped 25.6 percent to
7,414.1, the highest reading since the week ended June 27,
2003, when it reached 8,599.1.
The adjustable-rate mortgage share of activity increased to
1.1 percent, up from 0.9 percent the previous week.
Fixed 15-year mortgage rates averaged 4.63 percent, down
from 4.67 percent the previous week. Rates on one-year ARMs
decreased to 5.89 percent from 5.90 percent.
(Editing by Kenneth Barry)