Applications for U.S. home mortgages rose for the first week in a month as falling interest rates increased incentives to refinance existing loans, according to data from an industry group on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity climbed 3 percent to 684.9 in the week ended Feb. 29.
The MBA's seasonally adjusted index of refinancing applications jumped 4.5 percent to 2,569.0, marking the first increase since Jan. 25.
The seasonally adjusted MBA index measuring loan applications for home purchases edge up 1.4 percent to 363.1.
The rise came as fixed 30-year mortgage rates averaged 5.98 percent last week, plunging from 6.27 percent the previous week.
Falling mortgage rates mirrored the declines in long-term yields on U.S. government securities that came as investors sought stability from stock market volatility.
Reports last week showing consumer confidence at its lowest level in 16 years and larger-than-expected losses at financial companies fueled fears of recession and calls for deeper short-term interest rate cuts by the Federal Reserve.
Benchmark U.S. Treasury yields have risen this week on rising concern that lower Fed rates will fuel faster inflation.
Despite lower rates, many analysts expect the housing slump will worsen through 2009 as rising foreclosures add to already burgeoning inventories.
Sales of existing homes fell for a sixth straight month in January, while prices tumbled 4.6 percent from a year earlier.