Economy Vital Signs
Al Behrman/AP
NEW YORK -- Applications for U.S. home loans rose for the first time in four weeks as mortgage rates fell from their highest level this year, although demand for purchase loans slipped, data from an industry group showed Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, rose 1.3 percent in the week ended Aug. 30, after sliding 2.5 percent the prior week.

The rise came as 30-year mortgage rates fell to 4.73 percent versus 4.80 percent the prior week, which was its highest this year, according to MBA data. Borrowing costs, however, have climbed by more than a percentage point since late May on the view that the Federal Reserve will soon reduce its monthly bond purchases, which have kept a ceiling on rates.

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

The Fed began its bond purchasing program nearly a year ago to boost a sluggish recovery in the U.S. economy. The drop in rates likely encouraged borrowers into refinancing existing home loans. The refinance index rose 2.4 percent last week.


The refinance share of total mortgage activity rose to 61 percent from 60 percent the previous week, which was the lowest since April of 2011. The gauge of loan requests for home purchases, a leading indicator of home sales, fared worse, falling 0.4 percent.

Housing has been a bright spot in the U.S. recovery, with prices rising steadily since early 2012. Economists, however, expect the pace of the price gains to slow down for the remainder of this year and in 2014.

A sign that rising mortgage rates have taken some steam out of America's housing market recovery was reflected in a separate report last week that showed contracts to purchase previously owned U.S. homes fell for the second straight month in July.

Economists largely expect the Fed to announce a pull back at its policy meeting later this month, though some say the central bank will think twice about higher long-term interest rates if there is evidence that they are making a significant impact on housing.

Nevertheless, rates remain low by historical standards and most economists do not expect the higher costs to halt the recovery altogether. In fact, in the short-term, it could motivate potential buyers to act before rates rise even more.

Increase your money and finance knowledge from home

Banking Services 101

Understand your bank's services, and how to get the most from them

View Course »

Introduction to Preferred Shares

Learn the difference between preferred and common shares.

View Course »

Add a Comment

*0 / 3000 Character Maximum

1 Comment

Filter by:
GoodNews GoodNews

Hello Everybody,

My name is Mrs. Monica Roland. I live in UK
London and i am a happy woman today? and i
told my self that any lender that rescue my
family from our poor situation, i will refer
any person that is looking for loan to him,
he gave me happiness to me and my family, i
was in need of a loan of $250,000.00 to
start my life all over as i am a single
mother with 3 kids I met this honest and GOD
fearing man loan lender that help me with a
loan of $250,000.00 U.S. Dollar, he is a GOD
fearing man, if you are in need of loan and
you will pay back the loan please contact
him tell him that is Mrs. Monica Roland that
refer you to him. contact Mr. Anthony Hampton
via email: (easyloans03@gmail.com)

November 23 2013 at 10:01 PM Report abuse rate up rate down Reply