US Mortgage applications rise

NEW YORK, March 11 (Reuters) - U.S. mortgage applications rose for the first time in three weeks as near record low interest rates spurred demand for home refinancing and purchase loans, data from an industry group showed on Wednesday.
The jump in demand came several weeks after the unveiling of the strongest government action yet to aid homeowners since the housing market's meltdown began and may help gauge what is in store this spring, the peak home-buying season.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications , which includes both purchase and refinance loans, for the week ended March 6 increased 11.3 percent to 723.4.
U.S. President Barack Obama last month announced the Homeowner Affordability and Stability Plan, which is designed to provide much-needed support to the housing market. The goals of the housing plan are to support refinancing for good quality borrowers; help distressed borrowers avoid foreclosure; and stimulate new housing demand through the expansion of Fannie Mae (FNM.P)(FNM.N) and Freddie Mac (FRE.P)(FRE.N), the top two U.S. home funding companies.
Mark Goldman, lecturer of real estate at San Diego State University, said interest rates on mortgages are at enticing levels that could lift demand in the months ahead.
"It does not really matter if interest rates on mortgages move up one week or move down another, they are still at historically low levels," he said.
"What is important right now is that home affordability has improved and low interest rates help more people afford to buy a home," he said.
Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 4.96 percent, down 0.18 percentage point from the previous week and the second lowest rate since the weekly MBA survey began in 1990. The record low was 4.89 percent for the week ended Jan. 9, 2009.
Interest rates were well below year-ago levels of 6.37 percent.
The U.S. housing market is in the worst downturn since the Great Depression and its impact has rippled through the U.S. economy, as well as the rest of the world. Economists contend the United States might not emerge from recession unless the housing market stabilizes.
Goldman, who is also a mortgage broker, said for people who have equity in their home the opportunity to refinance to lower monthly payments should provide a bit of relief to strapped consumers amid a shrinking economy.
"The main problem is that wages are stagnant, but it does present the opportunity to save more money and go consume, which will help the economy," he said.

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