U.S. mortgage applications increased for the fifth week in a row, boosted by an increase in mortgage applications for purchases, the Mortgage Bankers Association announced Wednesday in a statement.

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%.

Mortgage application volume increased 7.5% for the week ended Jan. 25, 2008, the Mortgage Bankers Association's announced Wednesday.

The MBA's application index rose to 1,054.9 from 981.5 the previous week. The index peaked at 1,856.7 during the week ending May 30, 2003, at the height of the housing boom.

Refinance volume pushed the index higher. Refinance application volume increased 22.1%, while purchase volume tumbled 17.7%. Refinance applications accounted for 73% of total applications.

An index value of 100 is equal to the application volume on March 16, 1990, the first week the MBA tracked application volume. A reading of 1,054.9 means mortgage application activity is 10.549 times higher than it was when the MBA began tracking the data.

The survey provides a snapshot of mortgage lending activity among mortgage bankers, commercial banks and thrifts. It covers about 50% of all residential retail mortgage originations each week.

Mortgage applications increased a seasonally-adjusted 8.3% compared to the prior week on continued, lower interest rates, the Mortgage Bankers Association announced Wednesday in a statement.

Furthermore, the association said refinance applications rose 16.9% during the week ended January 18, 2008 compared to the previous week, and are up 92% since November 2007. Purchase applications are up 7% during the same period. Also, the 4-week moving average for all loan applications increased 13.7% compared with the same period a year ago.

The average interest rate for the 15-year fixed-rate mortgage was 4.96%, down from 5.07%. The 30-year fixed-rate mortgage was 5.49%, down from 5.62%. The rate for a one-year ARM was 5.51%, down from 5.77%.

After months and months of dreary news from the worlds of housing and real estate, here's a bit of a pick-me-up: applications for mortgages rose 32.2% during the week of January 4, which was shortened by the New Year's holiday. This was a welcome change, as demand had been heading lower for the three previous weeks.

The Mortgage Bankers Association said in its weekly findings that its overall application index rose to 706 from 533.9 the previous week. Holiday-season volatility could be partially responsible for this jump -- in the week surrounding New Year's Day 2007, the application index was 16.6% higher.

Refinance volume spiked 53.9% during the week, while purchase activity was up 14.7%. Refinance applications accounted for 57.7% of total applications, up from 50.9% the previous week. (With all the speculation surrounding future rate cuts, wouldn't homeowners want to wait and see what happens at the next Federal Open Market Committee meeting in two-plus weeks?)

In its weekly report on the state of mortgage-application demand in the U.S., the Mortgage Bankers Association (MBA) said its purchase index dropped 8.5% to 360.8, while refinancing activity slid 15.4% lower to 1,620.9. The purchase index hasn't been this low since the week of October 10, 2003.

The group's index of overall mortgage-application activity declined for the third straight week, losing 11.6% to 533.9, hitting the lowest point since July 2006. These numbers were in the red even though borrowing costs have moved lower. Fixed 30-year mortgage rates averaged 6.05% in the latest reporting period, down 5 basis points to hit their lowest point since late November.

The MBA's smoothed-out four-week averages for its trio of indices also pulled lower. The overall market index lost 9%, the purchase index was down 5.9%, and the refinancing index was 11.8% lower on four-week moving average basis.

Mortgage applications fell 7.6% for the week ended Dec. 21, the Mortgage Bankers Association announced Thursday, with its Market Composite Index, a measure of mortgage loan application volume, falling to 603.8 from 653.8. Refinance volume declined 8.5%, while purchase volume dropped 6.6% for the week.

Fixed interest rates slowed a slight decline, dropping 0.08 percentage points, or 8 basis points, to 6.10% from 6.18% for a 30-year, fixed-rate mortgage; and dropping 0.12 percentage points, to 5.66% from 5.78% for a 15-year, fixed-rate mortgage.

The mortgage survey covers approximately 50% of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990, the MBA said. Respondents include mortgage bankers, commercial banks and thrifts.

Economic Analysis: The weekly mortgage application stat continues to indicate a softening housing sector with few signs of stabilizing. Conventional, 30-year fixed mortgage rates remain at tolerable levels, but applications continue to decline, which points to tighter lending standards, and perhaps more caution on the part of potential borrowers, given concerns about a weakening U.S. economy.

Headlines scream today that mortgage applications hit their highest level in two years, but are they really up, or are people just putting in more applications hoping one of them will succeed in finding new money? Credit is tight and there is a lot less money going around now that many investors have left the mortgage market. Even Countrywide (NYSE: CFC) admits that 80% of the new mortgage loans it approves must meet Fannie Mae (NYSE: FNM) or Freddie Mac (NYSE: FRE) standards. Fannie Mae and Freddie Mac both say they are in trouble and their available funds are tight as well.

So to get a mortgage today, you either have to have an excellent credit rating, or good timing -- applying at just the right time when the lender involved has some money available from one of the few private investors still in the mortgage marketplace. If you don't have a prime credit rating, then you have to count on your lender finding mortgage money from private sources. Freddie Mac and Fannie Mae are not touching subprime loans right now and are tightening their approval requirements for prime loans.

The Mortgage Bankers Association reports that its index of mortgage applications rose by a seasonally adjusted 2.5% to 811.8 for the week ending Dec. 7, with demand for both new purchases and refinances. Hopefully, that means people with ARMs resetting are finding a new mortgage rather than allowing their home to go to foreclosure after the interest rate resets. Also, hopefully that means more people are out there buying up the glut of homes at bargain basement prices, so we can clear up the excess and start seeing stabilization in the housing market.

The U.S. mortgage market entered uncharted territory this quarter when the Mortgage Bankers Association (MBA) reported that the number of homes starting foreclosures in the third quarter of this year topped all previous records [subscription required] since MBA first started tracking the numbers in 1972, according to the Wall Street Journal this morning. The Journal also reported that the fraction of homeowners behind in their payments rose to its highest level in 21 years.

Foreclosures rose for all types of mortgage loans, including prime loans. The MBA said the largest uptick was for ARMs including homeowners considered to be in the "prime" loan category. The four hardest hit states in the prime lending category were Florida, Ohio, Michigan and California. All four states have seen the biggest price drops in home prices since the real estate bubble burst.

Subprime ARMs still account for the lion's share of new foreclosures -- 43% of new foreclosures in the third quarter. But, prime ARMs facing foreclosures jumped and accounted for 18% of new foreclosures.

Anyone who still believes the mortgage mess will be contained to subprime borrowers is not reading the writing on the wall. As housing prices fall, gas prices rise, health costs soar and salaries stagnate, everyone is being squeezed financially. Anyone facing an interest rate adjustment on their mortgage will probably find it harder and harder to make ends meet and pay their mortgage -- especially after that mortgage payment resets higher. It's financially difficult for both prime and subprime borrowers, many of whom expected to refinance before an interest rate reset but can't now that their home is worth less.

Lita Epstein has written more than 20 books including "The 250 Questions You Should Ask to Avoid Foreclosure."

The number of mortgage delinquencies rose to a 20-year high in Q3 as borrowers increasingly found it difficult to make payments within the 30-day grace period, the Mortgage Bankers Association announced Thursday.

The percent of home loans with payments more than 30 days late rose to seasonally-adjusted 5.59%, the MBA announced -- the highest level since 1986. The group's survey began in 1972.

Telling stat

The delinquency statistic suggests that the housing correction "is far from over," according to economist Steve Affinito.

"It's not even the beginning of the end," Affinito told BloggingStocks on Thursday. "Generally during a housing slump, what you see first is a rise in unsold homes, and then a rise in delinquencies, mostly from homeowners who did not sell or could not refinance."

The Mortgage Bankers Association says that mortgage originations will hit an eight-year low next year, and that could cost 30,000 people in the industry their jobs.

"We have not yet seen fully the impact of the credit shock to the U.S. and world economies, and the severity of that impact will depend on how long it takes for the markets to return to normal functioning," Doug Duncan an economist for the MBA told Reuters. The group expects mortgage originations to decline 18 percent to $1.89 trillion next year.

And thus begins another unholy cycle. A national industry falls apart and that leads to big job losses. Those job losses harm the economy and further damage the housing market. It is the classic stuff of the beginning of a recession. People without jobs can neither make mortgage payments nor can they buy new homes.

Much of this states the obvious, but it does make a strong case for the Fed and Treasury to take another look at giving incentives to mortgage lenders to fix variable rate mortgages and be more lenient on repayments. If Secretary Paulson and his friends want to help large money center banks to raise a super-fund to buy big mortgage pools and save banks from huge write-offs, they may want to help the little guy who just wants to pay his mortgage or buy a house. Even Citi's Chuck Prince needs a place to live.

Douglas A. McIntyre is a partner at 24/7 Wall St.

More bad news for the struggling real estate market again today. According to the Mortgage Bankers Association, the number of mortgage holders entering the foreclosure process rose to an all time high during the April to June quarter.

The percentage of loans going into foreclosure jumped to a record 0.65 percent during the quarter. And this marks the third straight quarter in a row where foreclosures have climbed to record levels.

The scary part is that the troubles do not seem to be nearing an end. In addition to the rise in foreclosure proceedings, the quarter also saw a sizable 0.75% jump in the number of loans that moved into delinquency. Total loans entering delinquency rose to 5.12% of all home loans. That is a pretty scary figure. While it is true that not all delinquent loans will progress to the point of foreclosure, it sets the stage for more troubles ahead.