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US mortgage applications rise but sales seen tepid ReutersWed May 23, 2007 11:40AM EDT By Lynn Adler NEW YORK, May 23 () - U.S. mortgage applications rose last week for the fourth time in five weeks, although housing sales may languish as lenders make it more difficult to get loans approved, industry executives said.Many lenders have tightened standards as defaults and foreclosures mount on mortgages made to borrowers with blemished credit histories. The Mortgage Bankers Association said its mortgage application index rose 1.6 percent to a seasonally adjusted 686.2 in the week ended on Friday. It was the highest reading since 690.5 in the March 9 week and well above 552.6 in the same week a year earlier. While applications are up, "borrowers are having a tougher time getting mortgages and lenders have tightened up underwriting criteria, particularly on credit scores and downpayments," said Bob Moulton, president of Americana Mortgage Group in Manhasset, New York. Applications for both home purchases and mortgage refinancing climbed in the past week. Borrowing costs also climbed across the board. "This small upward blip in mortgage applications quite honestly is nothing to get excited about," said Moulton. "The whole overall trend is down. The number of sales is going to be down this year, the median home price is going to be down this year." Average 30-year fixed-rate mortgages, excluding fees, rose 0.10 percentage point to 6.23 percent from 6.13 percent the prior week, the biggest weekly increase this year. While this rate was just below the peak of 6.24 percent reached in the Feb. 9 week, long-term borrowing costs have held to an extremely narrow range between 6.03 percent and 6.29 percent all year. In the same week a year earlier, 30-year mortgage rates averaged 6.61 percent. The MBA's seasonally adjusted purchase index climbed 1.3 percent to 438.1 in the week ended May 18. The group's refinancing applications index rose 1.9 percent to a seasonally adjusted to 2,154.7. "Housing will continue to bleed, likely into 2008, but the hemorrhaging is now under control," T.J. Marta, fixed income strategist at RBC Capital Markets, wrote in a client note. New home sales figures on Thursday and existing home sales data on Friday will be scrutinized by analysts and investors for clues on the housing market. Home sales have been sluggish early in the spring selling season, when warmer weather and the end of the school usually stimulate house shopping. Many analysts say the historical tie between rising applications and increasing home sales has loosened. "Mortgage applications are probably being boosted by tighter lending standards, with applicants being rejected and reapplying," UBS wrote on Tuesday. Earlier this month, the National Association of Home Builders said builder confidence sank in May as lenders made it more difficult for borrowers to qualify for mortgages and order cancellations mounted. "One possibility, we think, is that marginal homebuyers, that is, people who think they may not get a mortgage at all or at least a mortgage on acceptable terms, are making multiple applications in order to boost their chances," added Ian Shepherdson, chief U.S. economist at High Frequency Economics in Valhalla, New York, in a separate Tuesday report.
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