US mortgage applications rose last week, fuelled by increased demand for home purchase loans even as interest rates hit their highest level

US mortgage applications rose last week, fuelled by increased demand for home purchase loans even as interest rates hit their highest level in nearly a year, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications , which includes both purchase and refinance loans, for the week ended July 6 rose 1.1 per cent to 626.2.

Applications were 10.5 per cent above their year-ago level.

The four-week moving average of mortgage applications, which smooths out the volatile weekly figures, was down 1.6 per cent at 627.0.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.65 per cent, up 0.15 of a percentage point, the highest since the week ended July 21, 2006, when they were at 6.69 per cent.

The rise in demand for loans to buy homes last week offset lower refinancing activity.

The MBA’s seasonally adjusted purchase index , widely considered a timely gauge of US home sales, rose 3.8 per cent to 453.9. The index was 6.8 per cent above its reading a year earlier, when it was at 425.0.

The group’s seasonally adjusted index of refinancing applications decreased 3.0 per cent to 1,636.9, its lowest since December 2006. The index was up 16.9 per cent from a year ago, when it was at 1,400.5.

The refinance share of applications decreased to 36.2 per cent from 37.8 per cent the previous week.

US home sales, prices to slip more this year-NAR

US home sales and prices will fall further in 2007 than earlier expected, the leading realty trade association predicted on Wednesday.

The National Association of Realtors trimmed its sales forecast for the fifth straight month and also widened its predicted drop in existing home values.

Existing-home sales are seen at 6.11 million units this year, down from the 6.18 million units it predicted last month.

Sales in 2007 will be the lowest since 2002 when 5.63 million existing homes were sold. Even with the decline, this year would rank as the fifth highest on record, the trade group said.

The national median sales price for existing homes should ease by 1.4 percent to $218,800 this year. Last month the trade group said prices should slip 1.3 per cent.

New-home sales should drop to 865,000 this year from the 1.05 million sales in 2006, the NAR said in a monthly report.

Housing starts, including multifamily units, are forecast at 1.43 million units this year and 1.44 million in 2008, down from 1.80 million last year, the group said.

Source: The Business Times, 11 July 2007