Lower Rates Prompt Surge in Mortgage Lending

WASHINGTON – With mortgage rates falling for the past month, the number of mortgage applications rose by 8.1% last week, compared to the holiday-abbreviated week before, according to the Mortgage Bankers Association. Applications, including both loans for purchases and those for refinancing, were up 1.9% compared with the same week a year ago. Application volumes had been down by double digit percentages for most of the year. Applications for loans to refinance an existing loan increased 13.7% in the past week. The share of loan applications that were for refinancings increased to 50.1%, the largest share since April 2004. Refinance loans are up about 25% compared with the same week a year ago. Low mortgage rates have spurred a new refinance boom as borrowers flock to lock in lower rates or get out of adjustable loans that are about to reset at a higher rate. The average rate for a 30-year fixed-rate mortgage dropped to 5.98%, the lowest since October 2005. Since early July, rates have fallen by 83 basis points, or 0.83 of a percentage point. The rate for a 15-year fixed-rate loan averaged 5.66%, dropping from 5.86% a week earlier. It's the lowest rate since January.