U.S. mortgage applications rose for a second consecutive week, fueled by a jump in demand for home refinancing loans as interest rates dropped, 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 May 9 climbed 2.9 percent to 674.4.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.82 percent, down 0.09 percentage point from the previous week.
Interest rates were also below year-ago levels of 6.13 percent.
The MBA's seasonally adjusted purchase index dropped 0.7 percent to 378.5.
The index was also below its year-ago level of 432.3, a drop of 12.4 percent.
Overall mortgage applications last week were 0.2 percent below their year-ago level.
The four-week moving average of mortgage applications, which smoothes the volatile weekly figures, was down 2.7 percent to 633.6.
Refinancing Demand Jumps
The group's seasonally adjusted index of refinancing applications jumped 6.5 percent in the week to 2,422.1 and was up 14.5 percent from its year-ago level of 2,115.5.
Consumers seeking to refinance their existing home loans tend to be highly sensitive to shifts in interest rates.
The refinance share of applications increased to 48.7 percent from 47.1 percent the previous week.
The adjustable-rate mortgage (ARM) share of activity increased to 8.3 percent, up from 6.8 percent the previous week.
Fixed 15-year mortgage rates averaged 5.38 percent, down from 5.49 percent the previous week.
Rates on one-year ARMs dipped to 6.60 percent from 6.77 percent.
The MBA's report precedes separate data this week gauging the state of the U.S. housing market.
The National Association of Home Builders on Thursday will release its NAHB/Wells Fargo Housing Market Index for May.
The Commerce Department on Friday will release its report on housing starts for April.
U.S. housing market indexes tend to be volatile, but this week's data may help gauge what is in store for the hard-hit sector this spring, which is traditionally the peak of the home-buying season.