Home loan applications rise for second week

PBN Staff

07/11/2007

WASHINGTON – U.S. mortgage applications rose a seasonally adjusted 1.1 percent last week, according to a report today from the Mortgage Bankers Association. Applications rose 25.3 percent compared with the same week in 2006.
An increase in applications from home buyers outweighed a decrease in applications for refinancing, the trade group’s weekly survey found.
The MBA’s Market Composite Index, a measure of loan application volume, rose to 626.2 points from 619.4 the previous week. (March 16, 1990 = 100) The Purchase Index rose 3.8 percent last week to 453.9 points, while the Refinance Index fell 3.0 percent to 1,636.9. Adjustable-rate mortgages accounted for 20.4 percent of loan applications in the week ended July 6, down from 21.0 percent the previous week, as the number of applicants seeking conventional loans rose 1.2 percent.
The weekly survey, covering about 50 percent of U.S. retail mortgage originations, has been conducted by the MBA each week since 1990.
“Things are close to bottoming out in terms of sales, but the bottom numbers are going to look pretty bad,” Mark Vitner, senior economist at Wachovia Corp. in Charlotte, N.C., told Bloomberg News. One reason applications remain high, he added, may be that borrowers who previously were rejected are reapplying for loans.
“Several risks – the elevated levels of homes for sale, recent increases in mortgage rates, and rising foreclosures of subprime borrowers – point to continued weakness in the months ahead,” Freddie Mac Chief Economist Frank Nothaft said a statement. In a forecast issued Monday, the mortgage buyer predicted residential lending will hit a five-year low this year and home sales will be the lowest since 2001.

The Mortgage Bankers Association, based in Washington, D.C., is a trade group representing the real estate finance industry. Its 3,000 member companies include mortgage firms, commercial banks, thrifts, life insurance companies and others. Additional information is available at www.mortgagebankers.org.

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