Mortgage Applications Surged By Record Amount

NEW YORK (Reuters) - Mortgage applications surged by the largest amount on record last week as a new Federal Reserve program pushed interest rates down to their lowest level in more than 3 years, data from an industry group showed on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, for the week ended November 28 soared a record 112.1% to 857.7, the highest reading since the week ended March 21 when it reached 965.9.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 5.47%, down a whopping 0.52% from the previous week, the largest drop since 1990 when the MBA started conducting the weekly survey (see chart above).

Interest rates are at their lowest level since the week ended June 24, 2005, when they reached the same level. Interest rates are sharply below the peak of 6.59% reached during the summer, but only slightly below the 2008 low of 5.49% in January, according to the trade group.

HT: Ben Cunningham