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Loan Applications Rise, Data Say

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Bloomberg News

Published: September 13, 2007

U.S. mortgage applications rose 5.5 percent last week, reflecting gains in both purchases and refinancing.

The Mortgage Bankers Association's index of applications to buy a home or refinance a loan rose to 657.4 from 622.9 the prior week. The group's purchase index rose 5.2 percent and its refinancing gauge rose 6 percent.

The two-year housing recession is likely to deepen as stricter lending rules make it harder and more expensive to get loans or refinance. Some economists say the applications report overstates activity because the survey only includes retail lenders, which probably have seen an increase in business as many wholesale brokers closed their doors.

'The survey overstates activity,' said Michelle Meyer, an economist at Lehman Brothers Holdings Inc. in New York. 'We discount the MBA survey and continue to look for home sales to fall through next year.'

Home sales are down 12 percent since February while mortgage purchase applications in August were up 11 percent from February's average.

The mortgage bankers' purchase index rose to 448 last week from 425.8 the prior week. The refinancing index increased to 1876.6 from 1770.2.

The housing slump will linger longer than previously forecast, most economists and housing professionals now say.

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