Mortgage applications jumped 16.2 percent in the second week of January from the lowest level in more than a year, as demand for loans both to refinance and purchase homes rose, a private group survey found.
The Mortgage Bankers Association's gauge of applications to buy and refinance homes rose to 682.9 for the week ended Jan. 14 from the prior week's 587.8. The index for the week ended Jan. 7 was the lowest since December 2003.
Interest rates within a percentage point of record lows are keeping demand for new mortgages strong. The National Association of Realtors sees sales for both new and existing homes this year coming in at the second-highest on record.
"The economy is still doing well and long-term interest rates are still attractive for borrowing," Wells Fargo & Co. Chief Financial Officer Howard Atkins said. "On the consumer side, everything from home-equity loans and first mortgages continue to have strong demand."
The mortgage bankers group's index of applications to buy homes rose 14 percent to 448.1, from 393.1.
The refinancing gauge increased 19 percent to 2048.6 from 1720.5. That was the highest level since the week ended Nov. 19, when the index was 2179.3.
"Housing affordability is still quite good and interest rates, even though rising, are still low by historical standards," Nariman Behravesh, chief economist at Global Insight Inc. in New York, said before the report. "Conditions are still pretty good for housing."
Wells Fargo, the second-biggest U.S. mortgage lender behind Countrywide Financial Corp., had $298 billion in mortgage originations last year, the third-highest level ever. The company's first-mortgage portfolio rose 5 percent to $87.7 billion in the final three months of 2004.
Refinancing's share of overall applications fell to 48.9 percent from 49 percent last week.
The percentage of applications for adjustable-rate mortgages rose to 32.8 percent from 32.7 percent.
The portion of U.S. homebuyers opting for adjustable rate mortgages rose to 34 percent last year, from 19 percent in 2003, Freddie Mac said on Jan. 5. It was the highest annual percentage since 1994, when it was 39 percent, according to Freddie Mac, the No. 2 purchaser of home loans.