Data from the Mortgage Bankers Association Weekly Application Survey showed on Wednesday that mortgage applications rose for the second straight week in the United States as demand for home refinancing loans went up as interest rates lowered. However, the demand for purchase home loans fell to its lowest level indicating a not so good a future for home sales.

The MBA said that the seasonally adjusted index of mortgage applications for the week ending July 10, increased 4.3 percent to 514.4.This includes both purchase and refinance loans, Even with the improved affordability of US homes, people are still on a wait and see attitude being wary as unemployment rate shoot up to 9.5 percent, its highest in nearly 26 years. People have lost their jobs while some fear that they may also lose theirs.

According to the survey, Interest rates on 30-year fixed-rate mortgages, excluding fees, averaged 5.05 percent, down 0.29 percentage point from the previous week, the lowest since the week ended May 22, but higher than the all-time low of 4.61 percent set in the week ended March 27. The survey has been conducted weekly since 1990.

The Mortgage Bankers seasonally adjusted index of refinancing applications increased 17.7 percent to 2,009.4 while purchase applications fell 9.4 percent to 258.8, the lowest reading since the week ended May 22.

Refinancing applications comprised 54.9 percent of all mortgage activity, up from 48.4 percent the previous week.

The adjustable-rate mortgage (ARM) share of activity increased to 5.0 percent from 4.4 percent of total applications from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 5.05 percent from 5.34 percent, with points decreasing to 1.12 from 1.13 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.59 percent from 4.83 percent, with points increasing to 1.07 from 1.06 (including the origination fee) for 80 percent LTV loans.

The average contract interest rate for one-year ARMs decreased to 6.47 percent from 6.58 percent, with points decreasing to 0.11 from 0.14 (including the origination fee) for 80 percent LTV loans.

Source: Morgage Bankers Association, MBAA.org