Mortgage refinancings rise

The number of Americans applying for a home loan rose last week even as borrowing costs rose slightly from seven-month lows.

The Mortgage Bankers Association said its market index, a measure of weekly mortgage activity, rose 2.1 percent to 854.5 in the week ended Feb. 20.

The MBA's refinancing index, a gauge of demand for home loan refinancings, rose 1.9 percent to 3,361.9 from the previous week's 3,298.3 even as 30-year mortgage rates rose to 5.49 percent last week from 5.46 percent in the Feb. 13 week.

"Mortgage applications would indicate that housing continues to move along quite well," said Stephen Stanley, chief economist at RBS Greenwich Capital Markets Inc. in Greenwich, Conn. on Tuesday before the report was released.

"We are looking for mortgage rates to stay below 6 percent for the rest of the year. That is great for families who are shopping for a mortgage," said Frank Nothaft, chief economist at Freddie Mac in McLean, Va., on Tuesday.

The MBA said its purchase index, a gauge of new requests for loans to buy homes, rose 2.3 percent to 423.5.

The steady demand for mortgage loans to buy homes has been aided by persistently low mortgage rates. Last week, Freddie Mac reported that 30-year mortgage loan rates were at 5.58 percent -- a low not seen since July 11, 2003, when they were at 5.52 percent.

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Mortgage rates hit 45-year lows last summer, spurring a record year for home sales and home loan refinancings.

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The home buying comes even as recent reports show consumer sentiment has sagged. On Tuesday, the Conference Board, a private research group, said consumer confidence fell in February, with Americans deeply concerned about jobs.

But economists have noted that surveys of consumer sentiment may not be the best barometer of consumer activity.

"A lot of Fed officials have taken to saying you should follow what consumers do and not what they say," said Stanley.