Demand for Mortgages Rises as Rates Fall

Interest charge lowest since May, with Fed likely to cut further
By Nick McMaster,  Newser Staff
Posted Sep 12, 2007 11:23 AM CDT

(Newser) – Applications for home loans increased for the second week in a row as interest rates on both fixed and adjustable-rate mortgages fell, according to a survey by the Mortgage Banker's Association. Indices tracking applications for both purchases and refinancing showed a 5.5% increase over last week and a 12.5% jump from year-ago level, Reuters reports.

The cost for a 30-year, fixed-rate mortgages fell to 6.25%, the lowest since it stood at 6.23% in mid-May. Investors appear to be optimistic the Federal Reserve will cut its benchmark rate during its Sept. 18 meeting. The outlook for the housing market remains weak, Reuters says, suggesting recovery isn't imminent.