Florida Mortgage Applications Up 11.9 Percent

Applications for home loans increased last week as the recent drop in long-term Florida mortgage rates has encouraged home buying and refinancing, an industry group said Wednesday.

A seasonally-adjusted index of mortgage applications rose a significant 11.9 percent in the week ended September 29 to 633.9, its highest level since January, according to the Mortgage Bankers Association.

Long-term, 30-year fixed-rate Florida mortgages averaged 6.24 percent last week, up from 6.18 percent the week before but still substantially below recent highs in July. The boost in loan applications is the second sign this week that the housing market, which for months had been marked by slumping sales and falling prices, may be stabilizing.

Pending home sales actually rose 4.3 percent in August, marking the first increase since May, the National Association of Realtors said Monday.

The applications index had fallen as low as 527.6 in mid-July after rising interest rates and prices cut down the chances for affordable housing and sent speculators fleeing, adding to the quickly-rising amount of housing inventory that has grown by an astonishing 60 percent the past year.

Meanwhile, mortgage refinance activity has buoyed the overall home loan production as homeowners with adjustable loans are capitalizing on lower rates before their monthly payments are reset higher.

The move is especially popular among borrowers with adjustable-rate loans originated in the refinancing wave of 2003 that reset after 3-5 years.

The refinancing share of Florida mortgage activity last week increased to 46.7 percent of applications, highest since February 2005.

Rates have dropped since the Federal Reserve has held its target interest rate steady at 5.25 percent in August and September, and amid expectations that it will do the same at its meeting October 24-25.