NEW YORK (Reuters) - Applications for home mortgages jumped for a third consecutive week as plunging interest rates encouraged more homeowners to seek refinancings, an industry group said on Wednesday.þþThe Mortgage Bankers Association said its seasonally adjusted index of refinancing applications surged 16.9 percent in the week ending January 18 to 4,178.2, the highest level since March 2004. The activity was up 92 percent since the beginning of November and more than offset a 4.6 percent fall last week in the index for home purchase applications to 439.9, it said.þþRefinancings accounted for two-thirds of all applications.þþThe MBA's market composite index, a measure of overall mortgage loan application volume, rose last week by 8.3 percent to 981.5.þþThe rise followed a drop in the average 30-year fixed mortgage rate to 5.49 percent last week from 5.62 percent in the previous week and 6.18 percent in mid-December, the trade group said.þþÿIt is clear that borrowers are responding to the 40-80 basis point drop in rates we have seen since November 2 acrossÿ mortgage products, Jay Brinkmann, vice president of research and economics at the MBA, said in a statement.þþTighter lending conditions make it hard to estimate how many of the applications will be successful, he said. Lenders have pulled back on credit to borrowers of all credit histories after soaring delinquencies on subprime loans created billions of dollars in losses.þþMortgage rates have declined amid signs the housing downturn and less consumer spending will push the economy into recession, cooling the growth that fuels faster inflation. The Federal Reserve on Tuesday surprised markets with a 0.75 percentage point cut in its target interest rate, citing a weakening economic outlook, less availability of credit and softening labor markets.þþThe 10-year Treasury yield that roughly guides long-term mortgage rates declined by more than 0.2 percentage point since the MBA survey was conducted, suggesting 30-year mortgage rates are below levels measured on Friday.þþRates on short-term loans also fell. The average rate on a one-year adjustable mortgage declined to 5.51 percent last week from 5.77 percent in the prior period, the MBA said.þþ
Source: NY Times
