US home-purchase applications jump as mortgage rates settle back

[WASHINGTON] US mortgage applications for home purchases increased last week by the most since early January as financing costs continued to ease, a tentative sign that the housing market is grinding forward.

The Mortgage Bankers Association’s index of home-purchase applications rose 10.1 per cent in the week ended April 17, data from the group showed on Wednesday (Apr 22).

The contract rate on a 30-year mortgage dropped for a third week to 6.35 per cent, the lowest since mid-March. Rates on five-year adjustable mortgages tumbled 15 basis points, the most since January, to 5.48 per cent.

Cheaper home-financing costs also helped drive up MBA’s refinancing index by nearly 6 per cent.

The yield on the 10-year Treasury note, which offers a guide to the direction of home-financing costs, has been drifting lower as investors anticipate the US and Iran are closer to ending hostilities. The war has essentially halted shipments of oil and other products through the Strait of Hormuz.

In late March, the 10-year note had advanced to the highest level since July on fears higher energy costs would spark faster inflation.

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Other data have pointed to firmer underlying demand for US homes. On Tuesday, a report from the National Association of Realtors showed contract signings for purchases of previously owned homes rose 1.5 per cent in March to a four-month high, helped by a pickup in listings.

The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75 per cent of all retail residential mortgage applications in the US. BLOOMBERG