US mortgage applications rose for the first time in four weeks as long-term home loan interest rates plunged to their lowest levels since March, data from the industry's main trade group showed today.
The Mortgage Bankers Association (MBA) in a statement said its seasonally adjusted index of mortgage application activity for the week ended August 4th rose 4.9 per cent to 553.3 from the previous week's 527.6.
Borrowing costs on 30-year fixed-rate mortgages last week averaged 6.45 per cent, down from 6.62 per cent in the previous week and the lowest since the week ending March 24th.
"The worst of the housing market is behind us," said Richard Yamarone, chief economist at Argus Research in New York, before the MBA data was published.
"That's simply because the two primary drivers of housing - interest rates and demographics - are improving."
The US housing market has stumbled since last year as rising interest rates slowed demand for homes, resulting in burgeoning inventories and slower house price appreciation across the country.
The reprieve in mortgage costs since June followed growing speculation that a slowing economy would curb inflation and prompt the Federal Reserve to end its interest rate increases that it began more than two years ago.
The Fed after meeting on Tuesday left its federal funds rate at 5.25 per cent, as widely expected.
A borrower of $250,000 would pay about $70 less each month on a 30-year fixed-rate loan taken out last week versus June. Fixed-rate mortgages continued to gain popularity over adjustable-rate loans, the MBA said.
The variable rate share of activity fell to 27.6 per cent of all applications last week, the lowest level since March 2004. The average rate on a one-year variable mortgage declined to 5.96 per cent last week from 6.18 per cent.
The MBA's survey covers about 50 per cent of all US retail residential mortgage loans.