U.S. home loan refinancing surges

U.S. mortgage applications jumped last week as borrowers emerged in droves to refinance their existing home loans as interest rates fell to their lowest since early December, an industry trade group said Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and purchasing loans, increased 7.3 percent to 671.6 for the week ended March 2.

The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was up 1.7 percent.

Consumers tend to be sensitive to shifts in interest rate moves when they are looking to refinance their current home loans, and the week's sharp rise in refinancing demand was coupled with a drop in lending rates.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.04 percent, down 0.12 percentage point from the previous week to its lowest level since early December.

Interest rates were also below year-ago levels of 6.31 percent.

The group's seasonally adjusted index of refinancing applications surged 15 percent to 2,234.2. A year earlier the index stood at 1,614.4.

Demand for new home loans, however, was muted.

The MBA's seasonally adjusted purchase index, widely considered a timely gauge of U.S. home sales, rose 1 percent to 405.3. The index was also above its year-ago level of 399.0.

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The refinance share of applications increased to 46.1 percent from 43.2 percent the previous week.

Fixed 15-year mortgage rates averaged 5.73 percent, down from 5.84 percent. Rates on one-year adjustable-rate mortgages, or ARMs, decreased to 5.79 percent from 5.92 percent.

The ARM share of activity increased to 21.4 percent from 21.1 percent the previous week.

U.S. housing industry indexes, in general, tend to be volatile, and in recent months have painted a mixed picture, with some pointing to weakening and others to stabilization.

The MBA's survey covers about 50 percent of all U.S. retail residential loans. Respondents include mortgage banks, commercial banks and thrifts.