Economy-Finance

Mortgage applications up as rate drop boosts refis

NEW YORK, Sept 10 (Reuters) – The lowest 30-year mortgagerates since late May boosted demand for mortgage applicationslast week, particularly by homeowners looking to refinanceexisting loans, according to data published by an industrygroup on Wednesday.

Average 30-year loan rates sank 0.33 percentage point to6.06 percent in the week ending Sept. 5, spurring a more than15 percent jump in refinance applications, the Mortgage BankersAssociation said.

The slide in rates came prior to Sunday’s governmenttakeover of Fannie Mae (FNM.N: Quote, Profile, Research, Stock Buzz) and Freddie Mac (FRE.N: Quote, Profile, Research, Stock Buzz) ,the twolargest U.S. home funding companies, aimed at staunching globalmarkets turmoil and stabilizing the worst housing market sincethe Great Depression.

Home loan rates sank as much as a half percentage point theday after the bailout of the two struggling companies.

The MBA’s seasonally adjusted index of total mortgageapplication activity rose 9.5 percent last week to 496.2, thehighest level since mid-July.

The seasonally adjusted index of refinancing applicationsgained by 15.4 percent to 1,222.9 and the measure of homepurchase loan requests rose 6.4 percent to 371.5.

The past week’s results include an adjustment for the LaborDay holiday, which shut U.S. financial markets.

If the current 30-year fixed rate of about 6 percent holds,almost one third of the mortgage universe has a 1/2 percentagepoint or more incentive to refinance, according to JPMorgan.

“We would look for the refinancing index to more thandouble, moving into the 2,000 to 2,500 area,” the firm’sanalysts said on Monday.