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US mortgage applications spike on refinance demand

March 18th, 2009 3:16 PM by

U.S. mortgage applications jumped last week, driven by a spike in demand for refinancing as the average 30-year fixed-rate home loan rate fell.  Refi applications increased 30 percent in the week ended March 13 as the borrowing rate dropped 0.07 percentage point to 4.89 percent, tying the record low reached in early January in a survey that dates to 1990.

But purchase applications continued to lag those for refinancing, rising just 1.5 percent to a one-month high of 257.1. While Tennessee homeowners are often compelled to cut current costs, worries about job loss or hopes that prices will cheapen further have kept many potential buyers at bay.

First-time Tennessee home buyers are better positioned to take advantage of low rates and some measures to help the housing market, as they are unburdened with existing homes to sell in a market flooded with unsold houses. They can also take advantage a new $8,000 tax credit created by President Barack Obama's $275 billion housing stimulus.

The stimulus and other government steps aim to press down borrowing costs, spur refinancing and stifle the groundswell of foreclosures undermining the housing market.

Home loan rates have fallen as the government has purchased more than $250 billion of mortgage-related assets and announced unprecedented steps to stabilize the deepest housing slump since the Great Depression.

A year ago, the average rate on a 30-year mortgage was closer to 6 percent.

The Federal Reserve purchases of mortgage-related assets is nearing the half-way mark targeted by the end of June to help cut mortgage costs and revive housing. The programs are widely expected to be expanded to bring borrowing costs down, stimulate purchases and help struggling homeowners to refinance and avert foreclosure.

Refinancings requests represented about 73 percent of all mortgage applications last week.

 

some information obtained from www.reuters.com

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Posted by on March 18th, 2009 3:16 PM

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