US mortgage demand jumps after tax credit payback

By Lynn Adler

NEW YORK, June 16 (BestGrowthStock) – U.S. mortgage demand jumped
to a five-month peak last week, with applications to buy homes
up from 13-year lows set in the wake of buyer tax credits while
refinance loans hit the highest level since May 2009.

Mortgage purchase applications rose 7.3 percent after
sinking five weeks in payback for steamy demand before the
April 30 deadline for $8,000 in tax credits, the Mortgage
Bankers Association said on Wednesday.

Borrowing costs hovering near record lows sparked a rush
last week to cut costs on existing loans, driving the refinance
applications index up 21.1 percent to the highest level in 13
months.

Total home loan applications, up 17.7 percent in the week
on a seasonally adjusted basis, have not been higher since
mid-December, according to the industry group.
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It is premature to determine that the tax credit hangover
has fully played out and the U.S. housing market is crossing
the threshold into recovery.

“While it is clear that purchase applications in May
dropped sharply as a result of the tax credit induced increase
in applications in April, it is unclear whether we are seeing
the beginnings of a rebound now,” Michael Fratantoni, MBA’s
vice president of research and economics, said in a statement.

In a sign of ongoing stress in the housing market, builder
sentiment sank this month as the end of tax incentives clouded
prospects for future sales, the National Association of Home
Builders said on Tuesday. [ID:nN15218145]

Requests for refinancing continue to overshadow purchases.

About 3 of every four mortgage applications — 74.8 percent
— was for a refinancing last week. That was the highest share
since mid-December.

Average 30-year home loan rates climbed 1 basis point but
stayed low historically at 4.82 percent.

Long-term mortgage rates have fallen as low as 4.61 percent
in March 2009, according to the MBA, but remain about 1/2
percentage point below the recent high of 5.31 percent in
April.

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US mortgage demand jumps after tax credit payback