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June 14, 2006: 7:47 AM EDT
NEW YORK (Reuters) - U.S. mortgage applications rose for the first time in four weeks due to a surge in demand for home refinancing loans, an industry trade group said Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of refinancing applications for the week ended June 9 increased 10.6 percent to 1,499.4. A year earlier the index stood at 2,967.4.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.61 percent, up 0.01 percentage point from the previous week.
The refinance share of applications increased to 35.7 percent from 34.2 the previous week.
The MBA's seasonally adjusted index of mortgage application activity, which includes both refinancing and purchasing loans, increased 7 percent to 571.9 from the previous week's 534.4.
The MBA's seasonally adjusted purchase mortgage index rose 4.8 percent to 414.6.
However, the purchase index, which is considered a timely gauge of U.S. home sales, was substantially below its year-ago level of 529.3.
Historically low mortgage rates have fueled a five-year housing boom, helping support the U.S. economy's recovery from recession despite uncertain business investment.
While analysts differ on whether there is a housing bubble, most agree that the market is cooling off from its record run.
On Tuesday, in an interview with Reuters in Paris, Freddie Mac's chief executive, Richard Syron, said he expected that rising interest rates would lead to a slowdown in the U.S. housing market but he did not believe that the housing market would crash.
He also said that he expected a material slowing of the rate of appreciation of house prices but not an absolute decline.
Fixed 15-year mortgage rates averaged 6.27 percent, up from 6.23 the previous week. Rates on one-year adjustable-rate mortgages (ARMs) increased to 6.09 percent from 6.05.
The ARM share of activity increased to 30.7 percent of total applications last week from 29.4 the previous week.
The MBA's survey covers about 50 percent of all U.S. retail residential mortgage loans. Respondents include mortgage bankers, commercial banks and thrifts.
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