WASHINGTON - Mortgage applications continue to rise, reflecting a jump in refinancing and more home purchases, a private report has found.
The Mortgage Bankers Association's index of mortgage applications rose 6.5 percent to 755.5 in the May 31-June 3 period, from 709.1 the prior week.
The group's refinancing gauge reached its highest level since February. Historically low mortgage rates and an improving labor market helped push home sales to a record in April. Lower rates are also supporting refinancing, typically a source of extra cash for consumers.
"Housing activity continues to contribute positively to economic growth," Steven Wood, president of Insight Economics LLC in Danville, Calif., said before the report.
The index of applications to refinance loans rose to 2,362.1, the highest since the week that ended Feb. 18, from 2,142.1 a week earlier. The measure is 73 percent higher than a year earlier.
The gauge of applications to purchase homes rose 3.6 percent to 479.3 from 462.7.
The mortgage bankers' survey covers about half of retail residential mortgage originations and has been conducted weekly since 1990. The base period is March 16, 1990, when the value for all indexes was 100.
"At some point, we are going to probably see some leveling in the marketplace happen," Thomas Kunz, chief executive of Century 21 Real Estate Corp., said. "We thought it would probably start to take effect in '05 and we've been pleasantly surprised to see that we've held a pretty steady marketplace."
Home resales reached a record 7.18 million annual pace in April, the National Association of Realtors said on May 24. New-home sales were at an all-time high 1.316 million rate the same month, Commerce Department data showed.
The average rate on a 30-year fixed mortgage fell to 5.55 percent in the period - the lowest since the week that ended Feb. 11.
"With the 30-year fixed-rate mortgage rate declining to 5.55 percent, the refinance share of applications has increased to 42.9 percent, a level last seen in March of this year," Michael Fratantoni, senior director of single-family research and economics at the mortgage bankers group, said.
Refinancing's share of all mortgage applications had been 41.2 percent in the week that ended May 27. The share of applications for adjustable-rate mortgages fell to 31.7 percent, from 33.3 percent.