Buyers Ignore Surging Rates, Send Mortgage Apps Higher
Another surge in interest rates last week pushed prospective U.S. homebuyers to act as demand for applications for mortgages rose for the first time in a month, data from an industry group showed on Wednesday.
Fixed 30-year mortgage rates rose to their highest level since last March to average 4.15 percent in the week ended June 7, up 8 basis from the week before, the Mortgage Bankers Association said.
Rates have jumped in recent weeks on worries that the Federal Reserve could slow its economic stimulus program sooner than had been expected. The Fed is buying $85 billion in securities a month to keep borrowing rates low.
Mortgage rates are up 56 basis points since the start of May.
Even with the more expensive rates, the MBA's seasonally adjusted index of loan requests for home purchases rose 4.7 percent.
Analysts have said rising mortgage rates could spur some homebuyers who have been sitting on the fence to make up their minds to buy.
Cheap mortgage rates have helped the beaten down housing market get back on its feet in the past year as home prices have climbed, sales have improved and available inventory has tightened. Even with the recent gain, rates remain low by historical standards.
The gauge of refinancing applications rose 5 percent, while the index of mortgage application activity, which includes both refinancing and home purchase demand, also increased by 5 percent.
The refinance share of total mortgage activity increased to 69 percent of applications from 68 percent.
The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.