Mortgage Rates Steady, Applications Rise

Mortgage activity increased last week, with applications for both refinances and new home purchases rising after interest rates backed down from recent highs.

The weekly survey by the Mortgage Bankers Association (MBA) reported today that total mortgage applications were up nearly 11 percent on a seasonally adjusted basis, reversing a series of declines that saw total applications at a seven-month low last week.

Interest rates on 30-year fixed mortgages held steady in the survey at 5.34 percent for the second week in a row. That's about a quarter point below their recent high of 5.57 percent in early June, but above the all-time low of 4.61 percent posted at the peak of the refinancing rush in late March.

Rates still remain low by historical norms; the 30-year average reported for one year ago last week was 7.04 percent, nearly one and three quarter percent higher.

Mortgage refinancing increased more than 15 percent last week, with adjustments are taken for the July 4 holiday, the MBA reported. Mortgage applications for new home purchases rose nearly 7 percent as a foreclosure depressed housing market and government tax credits continue to generate interest among buyers.

Mortgage refinances remain relatively subdued, however, with refinance activity only about one-quarter of what it was at the peak of refinance demand in March. Refinances made up less than half of all mortgage applications last week, compared to nearly 80 percent of total volume in late March.

The MBA survey is based on responses from mortgage bankers, commercial banks and thrift institutions, and covers approximately 50 percent of U.S. retail residential mortgage applications.