As U.S. mortgage rates are setting record lows, demand for refinancing increased dramatically, driving home loan applications to the highest level since mid-January, data from the Mortgage Bankers Association showed on Wednesday. In the past weeks, as part of a greater home mortgage affordability overhaul created by the administration of U.S. President Barack Obama, average 30-year mortgage rates sank by a half percentage point. But, last week, the rate fell by just 0.02 point to 4.61 percent. The Obama administration is expected to continue to dish out measures in an effort to stabilize the volatile housing market, which is at its worst since the Great Depression of the 1930s. The Mortgage Bankers Association's applications index, which includes both refinancing and purchase requests, rose by a seasonally adjusted 3 percent in the week ending March 27 to 1,194.4. The purchase applications index changed by very little, rising 0.1 percent to 268, while the refinancing gauge gained 3.7 percent to 6,600.1—up sharply from 2,722.7 as recently as early February. As part of Obama's housing plan, there are new home-buying incentives, such as an $8,000 federal tax credit for first-time buyers and some state credits as well. Affordability by some measures is at a record high. U.S. home prices have been cut by around 30 percent from their mid-2006 peak, January indexes from Standard & Poor's/Case-Shiller on Tuesday showed. Mortgage rates in as recently as October, had reached nearly 6.5 percent.
