Mortgage Applications Up as Refinancing Picks Up

Applications for U.S. home mortgages climbed for a third straight week as more borrowers sought to refinance loans on which payments may be about to rise, an industry group said Wednesday.

The increase was led by the seasonally adjusted index of applications for home refinancings, which jumped 4.6 percent to 1,962, the highest level since May 18, the MBA said. The MBA gauge for home purchase applications edged 0.9 percent higher to 452.0 last week, it said.

The indexes underscore a growing urgency of homeowners with 5 million adjustable-rate mortgages slated to reset at higher rates over the next 18 months.

Concern that resets will boost delinquencies and foreclosures has risen as lenders eliminate programs that once accepted riskier borrowers, and increase requirements for consumers with good credit.

Refinancings accounted for 43.5 percent of all applications last week, up from 42.1 percent, the MBA said. Analysts have begun to question the value of the survey as an indicator of future home sales.

Multiple applications by borrowers who are ultimately rejected are counted in the survey, leading to overstated numbers, according to research from Lehman Brothers.

A survey by Campbell Communications earlier this month found 57 percent of homeowners trying to refinance their loans in August were turned down.

Fixed 30-year mortgage rates rose 4 basis points to 6.29 percent last week, the MBA said. The rate on 1-year adjustable mortgages increased to 6.39 percent from 6.34 percent.