Applications for U.S. home mortgages jumped to their highest level in nearly four years as low interest rates led more homeowners to seek refinancing, according to data from an industry group on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity rose 7.5 percent to 1,054.9 in the week ended Jan. 25. It was last higher in late March 2004, the MBA said.
The MBA seasonally adjusted index of refinancing applications soared 22.1 percent to 5,103.6, the highest since July 2003. But the index measuring applications for home purchases declined 17.7 percent to 362.0, the MBA said.
Refinancing activity rose to 73 percent of all applications, up from 66 percent in the previous week, the MBA said. The jump came after the Federal Reserve lowered its target short-term interest rate in an emergency move aimed at stemming economic weakness and easing tight credit conditions.
Fixed 30-year mortgage rates rose 0.11 percentage point last week to 5.6 percent, the MBA said. The previous week's rate was the lowest since late June 2005.
The Fed is expected to lower its overnight federal funds target again on Wednesday as it concludes a policy meeting. But lowering the short-term rate may not mean further declines in fixed-mortgage rates, which more closely follow yields on the Treasury 10-year note.