Industry group says mortgage activity surged 16.4% last week as consumers took advantage of low interest rates.
By Ben Rooney, CNNMoney.com staff reporter
Last Updated: October 7, 2009: 10:34 AM ET
NEW YORK (CNNMoney.com) — Mortgage applications surged last week as interest rates on home loans remained low, an industry group said Wednesday.
The Mortgage Bankers Association said its index of mortgage application volume rose 16.4% last week versus the previous week.
The surge in activity came as rates on 30-year fixed rate mortgages, the most widely used loan, remained below 5% for the third week in a row.
The average interest rate for 30-year fixed-rate mortgages fell to 4.89% last week from 4.94% the week before, according to the MBA. It was the lowest level since May 2009 when 30-year rates were 4.81%.
The MBA said refinancing applications jumped 18.2%, climbing to the highest level since mid-May. Purchase applications rose 13.2% to reach the highest level since January.
The report bodes well for the U.S. housing market, which has been stabilizing following a major slump. In addition to low interest rates, home sales have been supported by affordable prices and government tax credits.
But analysts say the market remains hampered by rising unemployment and warn that the budding recovery could falter if a popular $8,000 tax credit is allowed to expire at the end of the year.
Meanwhile, the average rate for 15-year fixed-rate mortgages eased to 4.32%, the lowest rate ever recorded in the survey.
Rates for one-year adjustable rate mortgages, or ARMs, rose to 6.56%.
First Published: October 7, 2009: 9:58 AM ET
