U.S. mortgage applications rose for the week ending June 10 by the most since July of last year, powered by a record number of loan requests to buy a home, a private report showed last week. Cheaper borrowing costs this month also boosted refinancing.
Home sales "could be a record this year," said Tim Rogers, chief economist at Briefing.com in Boston. "I don't expect a real strong upturn in rates, and I expect that to keep the housing sector booming."
The Mortgage Bankers Association's index of mortgage applications jumped to 887 in the week that ended June 10 from 755.5 the previous week. The 17.4 percent increase was the biggest since July 2, 2004, and the level was the highest since April 2, 2004.
The group's gauge of applications to purchase homes rose 10 percent to a record 529.3 from 479.3. The data suggest housing will provide more support for the economy due to 30-year fixed mortgage rates that have declined in recent weeks and job and income growth, economists said.
Home sales will top 8 million this year, marking the fifth consecutive record, the National Association of Realtors said on June 8. Sales of new homes will rise 3.2 percent and sales of previously owned homes are expected to increase 1.6 percent, the group said.
"We've sold out into the second quarter of next year," said Joel Rassman, chief financial officer of Toll Brothers Inc., a luxury homebuilder based in Horsham, Pa. "Our fiscal year ends Oct. 31. So, we are pretty much done through the second quarter of next year and selling into the third quarter of next year already."
Toll Brothers is seeing greater demand from consumers wanting to move up in quality of their home and from baby boomers looking for second or third homes, Rassman said.
The gauge of applications to refinance existing loans surged 26 percent to 2967.4, the highest since 4126.7 in the week that ended April 2, 2004. The index is twice as high as it was a year ago.