Nov. 10 (Bloomberg) -- The number of mortgage applications in the U.S. rose as purchases increased for a third straight week and refinancing picked up.
The Mortgage Bankers Association’s index increased 5.8 percent in the week ended Nov. 5, the Washington-based group said today. Refinancing rose 6 percent and purchase applications were up 5.5 percent, the most since Oct. 1.
Mortgage rates near a record low are spurring refinancing and helping the housing market stabilize after plunging earlier this year in the wake of the expiration of a government homebuyers’ tax credit. With the unemployment rate projected to exceed 9 percent through next year and home prices under pressure from foreclosures, housing may be restrained into 2011.
“Although the stabilization suggests the post-tax credit bust in home sales is probably over, the lack of recovery indicates overall home sales may remain depressed for some time,” David Resler, chief economist at Nomura Securities International Inc. in New York, said in a note to clients before the report.
The refinance gauge has more than doubled since January as rates have fallen to record lows.
The average rate on a 30-year fixed mortgage held at 4.28 percent. The 4.21 percent rate reported for the week ended Oct. 8 was the lowest in records going back to 1990.
At the current lending rate, monthly payments for each $100,000 of a loan would be about $494, or $37 less than year ago when the rate was 4.9 percent.
The average rate on a 15-year fixed loan held at 3.64 percent, and the rate on a one-year adjustable mortgage fell to 7.08 percent from 7.18 percent.
The share of applicants seeking to refinance rose to 81.7 percent from 81.3 percent the prior week.
Pending sales of previously owned homes fell in September, according to a Nov. 5 report from the National Association of Realtors. The group said moratoriums on foreclosures, stricter lending standards and appraisals coming in lower than selling prices are limiting progress in the housing market.
The foreclosure moratorium at banks including JPMorgan Chase & Co. threatens to prolong the time it takes for the housing market and prices to fully recover as properties slated for repossession take longer to come to market. Attorneys general in all 50 states are investigating foreclosure practices after court documents surfaced showing finance-company employees have signed papers without ensuring their accuracy.
PNC Financial Services Group Inc., the sixth-largest U.S. bank by deposits, said Nov. 9 it plans to resume home repossessions with “enhanced procedures.” Individual foreclosures have been delayed “until we are confident that any pending documentation issues have been resolved,” the company said in a regulatory filing.
Other reports also suggest the housing market continues to suffer.
Pulte Group Inc., the largest U.S. homebuilder by revenue, said Nov. 3 orders for the third quarter were down about 12 percent from the same period a year earlier. The company also closed on 3,865 homes in the quarter, down 7 percent.
“Even as low home prices and record-low interest rates combined to create unprecedented affordability, potential buyers are hesitant, given weak economic conditions, limited job growth and overall uncertainty about near-term opportunities,” Chief Executive Officer Richard Dugas said on a conference call.
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