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Mortgage applications rise as interest rates fall

According to the Mortgage Bankers Association (MBA), its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, rose 14.6% for the week ended February 26, from the earlier week. The Refinance Index rose 17.2% from the previous week while the seasonally adjusted Purchase Index increased 9.0% from one week earlier. The increase was due to a drop in loan rates — the rate on 30-year fixed-rate mortgages dropped to 4.95%. “Mortgage applications rebounded last week, particularly refis, as rates dropped back below 5 percent,” said Michael Fratantoni, vice president of research and economics at MBA. “Purchase activity remains subdued, with application volumes remaining within the narrow range seen in the last few months.” Analysts say the surge in mortgage applications is not an indication of long-term recovery, given the current levels of foreclosure and unemployment. “We are seeing positive signs of some form of life, but it is not si gnificant and the recuperation period is going to be significant because these are dramatic declines” in housing, said Vickie Lester, president of mortgage servicing at RoundPoint Financial Group.