NEW YORK (Reuters) - U.S. mortgage applications for buying or refinancing a home climbed to a two-month high last week, as home borrowing costs fell to their lowest in over a year, data from the Mortgage Bankers Association showed on Wednesday.
The Washington-based industry group’s seasonally adjusted index on mortgage activity edged up 1.6 percent to 390.0 in the week ended March 15. This was the highest reading since 400.6 in the week of Jan. 18.
Interest rates on 30-year fixed-rate mortgages with conforming loan balances of $484,350 or less decreased to 4.55 percent, the lowest since the Feb. 2, 2018 week. They averaged 4.64 percent a week earlier.
The decline in the average conforming mortgage rate was the steepest in about 2-1/2 months.
Other mortgage rates that MBA tracks fell 2 basis points to 10 basis points from the previous week.
Domestic home borrowing costs fell in step with lower U.S. Treasury yields.
“Mortgage rates declined once again, as concerns about the slowing global economy and status of Brexit continued to drive investors’ demand for U.S. Treasuries, ultimately pushing yields lower,” Joel Kan, associate vice president of economic and industry forecasting, said in a statement, referring to Britain’s exit from the European Union.
Benchmark 10-year Treasury yields were at 2.589 percent in early Wednesday trading, 2 basis points lower than on Tuesday and a week ago, Refinitiv data showed.
The bulk of the pickup in applications stemmed from demand for home refinancing.
MBA’s index on refinancing rose 3.5 percent to 1,146.8 last week, which was the strongest since the week of Jan. 11.
The share of refinancing versus total applications grew to 39.3 percent from 38.6 percent a week earlier.
On the other hand, MBA’s barometer on loan applications for home purchases, seen as a proxy on future housing activity, ticked up only 0.3 percent to 251.5, the highest since the week of Feb. 1.
“Entry-level housing supply remains weak and is likely hindering some would-be first-time buyers from finding a home,” Kan said.
(GRAPHIC-U.S. mortgages applications link: tmsnrt.rs/2RnEpRD).
Reporting by Richard Leong; Editing by Bernadette Baum