Mortgage Applications Surge on Lower Rates

Washington, DC, Oct. 7, 2009--U.S. mortgage applications surged last week to their highest since mid-May as interest rates remained below 5 percent according to the Mortgage Bankers Association.

The MBA said rates on 30-year fixed-rate mortgages reached a four-month low. Demand for home refinancing loans was the highest since mid-May.

Appetite for applications to buy a home, a tentative early indicator of sales, climbed to the highest level since early January. The trend bodes well for the hard-hit U.S. housing market, which has been showing signs of stabilization.

The MBA said its index of mortgage applications, which includes both purchase and refinance loans, for the week to October 2 increased 16.4 percent, the highest since the week ended May 22.

Low mortgage rates, high affordability and the federal government's $8,000 tax credit for first-time home buyers -- part of the stimulus bill -- have helped pave the way for stabilization.

The MBA's purchase index rose 13.2 percent to 306.1, its highest since the week ended January 2.