Fed Action Spurs New MortgageLending

WASHINGTON - (07/08/04) -- Last week's move by the FederalReserve to boost short-term interest rates and its implications forlong-term rates in the near future apparently prompted a new rushto mortgage refinancings and home purchases. The Mortgage BankersAssociation reported a 20% surge in mortgage applications last weekto the highest level in two months. "People may have viewed this asanother last opportunity," said David Berson, chief economist forFannie Mae, of last week's slight decline in long-term rates. TheMBA's refinance index rose 28% from the previous week; while itspurchase climbed by 15%. The group said the average for the30-year, fixed rate loan dipped below 6% last week, for the firsttime since the middle of April, to 5.96%; while the average for15-year, fixed-rate mortgages declined to 5.39%.