Mortgage applications rose as rates hit new lows

Applications for U.S. home mortgages rose last week as interest rates dropped to record lows in the wake of the Federal Reserve's latest stimulus efforts, data from an industry group showed on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 2.8 percent in the week ended Sept 21.

The MBA's seasonally adjusted index of refinancing applications climbed 3.3 percent, while the gauge of loan requests for home purchases, a leading indicator of home sales, added 0.7 percent.

The refinance share of total mortgage activity increased to 81.2 percent of total applications, the highest share since early August.

Fixed 30-year mortgage rates tumbled 9 basis points to average 3.63 percent, the lowest level in the history of the survey.

The drop in rates followed the Fed's announcement it will purchase $40 billion in mortgage-backed securities every month until there is improvement in the labor market.

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The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

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Reuters contributed to this report.

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