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U.S. home loan applications drift upward

Applications for mortgage loans in the United States rose slightly last week, just one week after touching their lowest level of 2003, a mortgage industry trade group said on Wednesday.
/ Source: Reuters

Applications for mortgage loans in the United States rose slightly last week, just one week after touching their lowest level of 2003, a mortgage industry trade group said on Wednesday.

The Mortgage Bankers Association said its widely watched measure of demand for loans to purchase a home, the purchase index, rose 2.9 percent to 401.3 in the Jan. 2 week.

The industry trade group's weekly refinancing index rose 6.8 percent to 1,755.4 in the week ended Jan. 2 as 30-year mortgage rates rose 8 basis points to 5.81 percent.

At the same time, the MBA said its seasonally adjusted market index, a measure of overall lending activity, rose 4.5 percent to 599.9.

"The market will be very healthy in the first part of this year, the first half. Mortgage rates continue to be very modest and that will translate into a healthy market," said Frank Nothaft, chief economist at Freddie Mac on Tuesday, prior to the release of the report.

Last week, MBA said new applications for U.S. mortgages fell in the Dec. 26 week to their lowest weekly level in 2003. The seasonally adjusted reading for last week, shortened due to Christmas, was the lowest since it hit 565.5 in the week ended June 14, 2002.

In the meantime, refinancings accounted for just under 50 percent of the Jan. 2 week's business, while adjustable rate loans made up 30 percent of the loan applications processed by lenders.