Applications for U.S. home loans rose last week _ despite the industry's turmoil _ as the cost of a conventional 30-year fixed rate mortgage dropped, according to AP. The Mortgage Bankers Association said its weekly mortgage index, which measures the volume of applications for loans to buy or refinance homes, rose 8.1 percent on a seasonally adjusted basis from a week earlier. In the first increase after two-straight weeks of declines, the mortgage index rose to 656.5 for the week ending Aug. 3, and was up 18 percent compared with the same week last year. The MBA's mortgage application index, which stood at 100 in March 1990, measures the number of home loan applications in a given week. It is derived from a survey of major mortgage lenders representing about half of the U.S. market and does not include loans originated by nonbank lenders. The index has fluctuated this year after sinking to its lowest level since 2002 last summer. Demand for new and existing homes has been hurt as lenders tightened borrowing criteria after defaults started to rise in the market for mortgages offered to borrowers with spotty credit histories. Numerous mortgage companies are facing troubles and many are demanding higher rates for larger loans that are not backed by government-sponsored mortgage giants Fannie Mae and Freddie Mac. On Monday, American Home Mortgage Investment Corp., a lender that catered to borrowers with moderate credit troubles, filed for bankruptcy protection. Freddie Mac reported last week that 30-year, fixed-rate mortgages averaged 6.68 percent, down from an 11-month high of 6.74 percent in mid-June. Recent stock market turbulence has prompted investors to plow money into bonds, driving down rates on bonds. That, in turn, has pushed down rates on mortgages.
