Mortgage Applications Jump on Lower Rates

Mortgage applications
Nam Y. Huh/AP

By Luciana Lopez

NEW YORK -- Applications for U.S. home mortgages jumped in the latest week, extending a recovery from a 13-year low at the end of December, an industry group said Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 11.9 percent to 386.1 in the week ended Jan. 10.

The index hit its lowest level since December 2000 at the end of last year, soon after the U.S. Federal Reserve announced it would start pulling back on its $85 billion per month bond-buying program as the economy grows strong enough to stand on its own.

That announcement, as well as months of speculation before the Fed actually moved, helped drive yields on benchmark 10-year U.S. Treasury notes about 125 basis points higher last year.

The jump in yields on the 10-year note, %VIRTUAL-article-sponsoredlinks%which is used as a standard in setting mortgage and other lending rates, has slowed mortgage applications recently.

The rate on fixed 30-year mortgages averaged 4.66 percent last week, down 6 basis points from the previous week.

The MBA's seasonally adjusted index of refinancing applications rose 11.2 percent.

The gauge of loan requests for home purchases, a leading indicator of home sales, gained 11.5 percent.

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