NEW YORK, Oct 31 (Reuters) A refinancing wave pushed total mortgage applications higher last week on the lowest 30-year mortgage rates since early May despite a small drop in demand for loans to buy homes, an industry trade group said on Wednesday.
The Mortgage Bankers Association's mortgage applications index rose by a seasonally adjusted 3.8 percent to 681.7 in the week ended Oct. 26.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, fell to an average of 6.15 percent from 6.21 percent the prior week. This loan rate was the lowest since 6.13 percent in the May 11 week, helping propel the MBA's refinance index to its highest level since the week of March 9.
The refinancing index jumped 9.2 percent to a seasonally adjusted 2,249.0 last week. Refinancings represented a growing share of total mortgage activity, rising to 49.6 percent from 47 percent the prior week.
Applications to purchase a home, in contrast, declined 0.7 percent last week to a seasonally adjusted 412.9, the MBA said.
Purchase applications have been exaggerated on the high side in recent months as borrowers, facing greater trouble getting mortgages approved by lenders, who have become more restrictive, apply multiple times for one loan.
With less access to credit, home sales are tumbling despite lower prices and other incentives.
Orders for homes are increasingly being canceled when mortgages applied for fall through.
Sales of existing homes fell in September to their lowest level on record dating to 1999, while unsold inventory swelled to record highs even though fixed mortgage rates have been contained.
Mortgages rates last week dropped across loan types, according to the Mortgage Bankers Association. Fifteen-year mortgage rates fell to 5.79 percent from 5.86 percent, and one-year adjustable mortgage rates dropped to 5.93 percent from 6.10 percent.
Adjustable-rate loans represented 14.7 percent of total mortgage activity last week, rising slightly from 14.2 percent the prior week.
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