US mortgage activity hits 2-month high as interest rates fall

NEW YORK: US borrowers filed the most loan requests to buy a home and to refinance one in two months as most lending costs declined to their lowest levels since September, the Mortgage Bankers Association said on Wednesday.

The Washington-based group's seasonally adjusted index on mortgage applications increased 1.6 percent to 346.0 in the week ended Dec. 7. This was the strongest reading since the week of Oct. 5 when it was 346.7.

Interest rates on 30-year, fixed-rate "conforming" mortgages with balances of $453,100 or less averaged 4.96 percent last week, the lowest level since the week of Sept. 28. They averaged 5.08 percent the prior week.

The weekly drop in the 30-year conforming mortgage rate was the steepest since March 2017.

Mortgage rates have fallen in step with U.S. Treasury yields due to worries about slowing economic growth, financial market volatility and trade tension between China and the United States.

Other home borrowing costs MBA tracks decreased by 8 basis points to 9 basis points from the week before.

Last week, the benchmark 10-year Treasury note yield  declined by 16 basis points, which was the biggest weekly fall since October 2015.

"Trade fears dominated investors' concerns, and this was amplified by data released by the U.S. Commerce Department showing a widening trade deficit," Joel Kan, MBA's associate vice president of economic and industry forecasting, said in a statement.

Kan was referring to government data released last Thursday that showed the U.S. trade gap deteriorated to its worst level in 10 years in October.

Falling mortgage rates rekindled submission of loan requests for home purchase and refinancing.

MBA's seasonally adjusted index on purchase loan applications, a proxy on future housing activity, rose for a fourth straight week to 256.1, its strongest reading since the week of July 6.

Higher interest rates, together with rising home prices, have raised the cost of buying a home.

In the third quarter, monthly mortgage payments for first-time U.S. homebuyers grew by 15 percent year-over-year, according to a report from Genworth Mortgage Insurance released on Wednesday.

From January to September, first-time homeowners bought 1.58 million single-family homes, the most in the first nine months of the year since 2005, Genworth said.

Meanwhile, MBA's barometer on refinancing climbed further from a near 18-year trough reached three weeks earlier. It rose 1.8 percent from the previous week to 851.6.

The share of refinancing applications grew to 41.5 percent last week, the biggest since March and larger than 40.4 percent the prior week, MBA said.