US mortgage applications hit 2.5-year high

New York

US mortgage applications jumped to their highest level in two-and-a-half years, led by a surge in refinancing activity, as some home borrowing costs declined to their lowest levels in more than a year, the Mortgage Bankers Association (MBA) said on Wednesday.

The Washington-based group's seasonally adjusted index on requests for loans to buy a home or refinance a mortgage increased 18.6 per cent to 503.6 in the week ended March 29. This was the strongest reading since 512.9 in the week of Oct 14, 2016.

Interest rates on 30-year "conforming" mortgages, or home loans with balances of US$484,350 or less, averaged 4.36 per cent, the lowest since the week of Jan 19, 2018. They were 4.45 per cent a week earlier.

Average rates on other fixed-rate mortgages MBA tracks fell by 0.07 percentage point to 0.14 percentage point.

"There was a tremendous surge in overall application activity, as mortgage rates fell for the fourth week in a row," Joel Kan, MBA's associate vice-president of economic and industry forecasting, said in a statement.

Much of the week's increase stemmed from a 39 per cent surge in refinancing activity, which propelled MBA's refinancing gauge to 1,786, its strongest level since November 2016.

Refinancings grew to 47.4 per cent of total mortgage applications last week from 40.4 per cent a week earlier, MBA data showed.

Existing homeowners with more expensive homes filed more refinancing applications with lenders last week. The average size of conforming loans for refinancing hit an all-time high at US$438,900 in the most recent week.

Loan applications to buy a home climbed by 3 per cent, with the average loan size shrinking slightly.

Smaller purchase loan sizes were "a positive sign that first-time buyers were increasingly active in the market", Mr Kan said.

MBA's seasonally adjusted barometer on purchase mortgages, seen as a proxy on future housing activity, has advanced since early March to 276.6, which was its highest level since the week of Jan 11. REUTERS