By Agency Reporter

Thursday, 25 Nov 2010

The number of mortgage applications in the United States rose last week as purchases increased by the most in two years, Bloomberg reported on Wednesday.

The Mortgage Bankers Association‘s index rose by 2.1 per cent in the week ended November 19 after dropping by 14 per cent the prior week, the biggest drop of the year, figures from the Washington- based group showed.

The gauge of purchases surged by 14.4 per cent, the biggest gain since November 2008, while the refinancing measure fell by one per cent.

Borrowing costs near a record low and reduced home prices were helping to stabilise a market struggling to recover after the April expiration of a government tax credit. A sustained improvement in housing may take longer as unemployment hovers close to 10 per cent and foreclosures persist.

”The housing market takes one step forward but then one half step back,” President, Naroff Economic Advisors, Holland, Pennsylvania, Mr. Joel Naroff, said before the report. ”The level of sales remains quite pathetic,” he added.

The share of applicants seeking to refinance a loan fell to 78.6 per cent last week from 80.3 per cent the prior week, today‘s figures showed.

The average rate on a 30-year fixed mortgage loan increased to 4.50 per cent from 4.46 per cent the prior week. The 4.21 per cent rate reported for the week ended October 8 was the lowest in records going back to 1990.

At the current 30-year rate, monthly payments for each $100,000 of a loan would be about $506, or $20 less than a year ago when the rate was 4.83 per cent.

The average rate on a 15-year fixed mortgage fell to 3.83 per cent from 3.87 per cent, and the rate on a one-year adjustable mortgage dropped to 7.09 per cent from 7.11 per cent.

Foreclosure moratoria at JPMorgan Chase & Company and other banks, along with government investigations into faulty paperwork, threatened to further delay the housing recovery as residential properties slated for repossession take longer to come to market.

Sales of existing homes fell by 2.2 per cent in October, more than forecast, to a 4.43 million annual rate, a report from the National Association of Realtors showed. The median price dropped by 0.9 per cent from a year earlier.

Homebuilders were echoing concern about the lack of a pickup in demand. D.R. Horton Incorporated, the second-largest US homebuilder by revenue, expects 2011 to be ”challenging” for the industry as consumer confidence and employment remain weak, Chief Executive Officer, Mr. Donald Tomnitz, said on a November 12 earnings conference call.

Source: Punch