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Federal Loans Boost Mortgage Applications

Applications for U.S. home mortgages jumped last week, fueled by the ongoing increase in activity for government-backed loan programs, according to data published by an industry group on Wednesday.

A home is advertised for sale at a foreclosure auction in Pasadena, California.
Reed Saxon
A home is advertised for sale at a foreclosure auction in Pasadena, California.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity rose 5.4 percent to 725.6 in the week ended April 4.

A year earlier the index stood at 646.6.

The MBA's index of refinancing applications last week rose 3.4 percent to 2,724.7, and its gauge of loan requests for home purchases climbed 8.1 percent to 384.7.

The sub-index of applications for loans backed by government programs such as the Federal Housing Administration and the Veterans Administration jumped by 12.9 percent last week, bringing the measure to 375.2, nearly three times the level of a year ago.

Borrowers have increasingly looked to FHA programs in recent months after lenders that once courted them have now closed or severely tightened requirements for getting a loan.

The government has expanded the reach of the FHA for homeowners facing foreclosure, and key lawmakers are lobbying to broaden the programs even more.

Fixed 30-year mortgage rates averaged 5.78 percent in the week, up 0.03 percentage point from the prior week.