A push by homeowners to lock in near record-low interest rates drove mortgage applications higher last week, as refinancing demand overshadowed a drop in loan requests to buy homes, the Mortgage Bankers Association said Wednesday.
Average 30-year U.S. mortgage rates edged up 0.03 percentage point to 4.73% last week, slightly above the all-time low of 4.61% three weeks earlier.
Refinancings represented nearly 80% of all mortgage applications, the industry group said.
The total mortgage applications index rose 5.3% in the week ended April 17 to a seasonally adjusted 1,172.2. The purchase index fell 4.2% to 253.0 while the refinance gauge gained 7.7% to 6,540.7.
Requests for new loans had also fallen in the prior week, after five straight weekly increases, as the Good Friday and Passover holidays dulled business.
While the keenly watched spring sales season should entice more potential buyers to deeply discounted prices, refinancing is expected to continue to dominate mortgage demand.
Many potential buyers are holding out for signs of stability in prices and are fearful of losing their jobs. Unemployment in March leaped to 8.5%, its highest rate in more than a quarter century.
Homeowners have rushed to refinance, however, responding to sweeping government actions to cut borrowing costs and shock some life back into the deepest housing downturn since the Great Depression.
Mortgage rates were as high as 6-1/2 percent as recently as October.
The refinance applications index has more than doubled in less than two months as loan rates fell by almost half a percentage point. In that same time, the purchase index has barely risen, to 253 from about 236 at the end of February.