(Reuters) - U.S. applications to refinance an existing home climbed to a near seven-month peak last week as 30-year mortgage rates fell for a fourth straight week, the Mortgage Bankers Association said on Wednesday.
The Washington-based industry group said its seasonally adjusted index on refinancing rose 9.2 percent from the prior week to 1,494.8 in the week of June 9. This was the highest level since 1,754.2 in the Nov. 18 week.
Declining borrowing costs may encourage more homeowners to seek new loans to either reduce their mortgage rates or borrow against the equity in their homes, analysts said.
“We might see a burst of refinancing activity,” said Doug Duncan, chief economist at Fannie Mae in Washington.
Interest rates on conforming 30-year fixed-rate mortgages fell to 4.13 percent, the lowest since the week of Nov. 11, from 4.14 percent the prior week.
Average rates on other types of 30-year loans the MBA tracks were 0.01 to 0.02 percentage point lower than the prior week.
Home borrowing costs have fallen in step with bond yields as recent economic data raised doubts whether inflation would be stuck below the Federal Reserve’s 2 percent goal for longer than previously thought.
On Wednesday, benchmark U.S. Treasury yields US10YT=RR fell to 2.11 percent, their lowest level since Nov. 10, in reaction to data that showed consumer inflation rose less than what traders had expected for a third straight month in May.
Last week’s decline in mortgage rates, however, failed to spur requests for loans to buy a home.
MBA’s seasonally adjusted gauge of applications to home purchase, a proxy for future home sales, fell 2.8 percent to 254.6 last week.
In the preceding week, the group’s purchase activity index reached its highest level since the week of May 2, 2010.
The group’s seasonally adjusted index of total mortgage applications increased 2.8 percent to 442.6, its highest level since the week of Nov. 18.
The share of refinancing expanded to 45.4 percent of total applications from 42.1 percent the previous week.
For a graphic on U.S. weekly mortgage rates and application activity click - tmsnrt.rs/2s0Nzco
Reporting by Richard Leong; Editing by Chizu Nomiyama and Meredith Mazzilli