U.S. mortgage applications rose last week to their highest level in nearly four years, fueled by demand for home purchase loans, an industry group said Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended Feb. 1 rose 3 percent to 1,086.6, its highest since the week ended March 26, 2004.
Many analysts, however, say the MBA's data has been skewed in recent months as prospective borrowers have been filing multiple applications to obtain a single loan due to widespread tightening of lending standards.
The MBA's data also counts all applications, including borrowers who are ultimately denied.
Nevertheless, interest rates for mortgages have been hovering around enticing levels.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.61 percent, up 0.1 percentage point from the previous week and 0.12 percentage point above where it stood two weeks prior when it reached its lowest since late June 2005.
Interest rates were below year-ago levels at 6.23 percent.
Mortgage rates have fallen along with U.S. Treasury yields in recent weeks. The benchmark 10-year U.S. Treasury note yield fell further on Tuesday after data showed the all-important U.S service sector contracted sharply last month, sending recession-wary investors into safe-harbor government bonds. Yields move inversely to price.
Overall mortgage applications last week were 72.4 percent above their year-ago level. The four-week moving average of mortgage applications, which smoothes the volatile weekly figures, was up 10.4 percent to 1,007.4.
Fixed 15-year mortgage rates averaged 5.09 percent, up from 5.04 percent the previous week. Rates on one-year adjustable-rate mortgages (ARMs) decreased to 5.62 percent from 5.70 percent.
Home Purchase Demand Up
The rise in applications last week was largely due to increased demand for home purchase loans. Demand for home refinancing loans, however, dropped last week after surging the previous three weeks.
The MBA's seasonally adjusted purchase index, jumped 12.0 percent to 405.3. The index came in above its year-earlier level of 404.7.
The group's seasonally adjusted index of refinancing applications decreased 1.0 percent last week to 5,054.0.
However, the index was up 160.1 percent from its year-ago level of 1,943.4.
The refinance share of applications decreased to 69.2 percent from 73.0 percent the previous week. The ARM share of activity increased to 8.8 percent, up from 8.6 percent the previous week.