The Mortgage Bankers Association's index of applications to buy a home or refinance a loan increased 3% last week to 1086.6 -- it's highest level since March 2004. The group's purchase index increased 12% and the refinancing gauge fell 1%.
Meanwhile, the average rate for a 30-year fixed loan rose to 5.61% from 5.60% the prior week. Rates have declined about one-half percentage point since the end of 2007. The average rate for a 15-year fixed mortgage increased to 5.09% from 5.04%.
Tighter lending standards
Economist Steve Affinito said tighter lending standards have dramatically slowed housing activity, but those borrowers able to secure mortgages, primarily good-credit borrowers, are benefiting from the U.S. Federal Reserve's recent interest rate reductions to stimulate the U.S. economy.
"We have seen a slight decline in 30-year mortgage rates, so that will make home purchases possible for a larger pool of borrowers, but it's important to note that lending standards are now very rigorous, eliminating many higher-risk applicants," Affinito said. "The current mortgage climate favors borrowers will good credit histories, and is likely to remain that way for at least the rest of 2008."
Created in 1990, the Mortgage Bankers Association's loan survey covers about half of all U.S. retail residential mortgage originations.
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