Home loan demand surges as interest rates drop

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NEW YORK — Mortgage applications rose for the first time in three weeks as interest rates fell sharply and demand surged for home purchase and refinance loans, an industry group said Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended Aug. 3 rose 8.1% to 656.5, highest level since early June.

The four-week moving average of mortgage applications, which smooths the volatile weekly figures, was up 1.2% to 626.0.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.41%, down 0.09 percentage point from the previous week. Interest rates were below year-ago levels of 6.45%.

The MBA's seasonally adjusted purchase index, widely considered a timely gauge of U.S. home sales, rose 7.4% to 447.4, well above its year-earlier level of 388.9.
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http://www.usatoday.com/money/economy/housing/2007-08-08-mortgage-apps_N.htm