With special tax credits set to expire at the end of April, applications for loans to purchase homes are at their highest level in five months, a mortgage trade group said Wednesday.
Releasing a survey for the week that ended Friday, the Mortgage Bankers Association said its seasonally adjusted purchase index rose 6.8 percent from a week earlier.
Michael Fratantoni, the group's vice president of research and economics, noted that a similar surge took place in October, when an $8,000 credit for first-time buyers was set to run out. As an economic stimulus measure, Congress extended the program through April 30 and added a $6,500 tax credit for some trade-up buyers.
"We expect to see gains in the next few months, with the tax credit helping to increase sales," Julia Coronado, a senior economist at BNP Paribas in New York, told Bloomberg News. "Even with all the policy support, we're not getting the kind of strong housing recovery we'd expected. We'll inch our way forward."
By contrast, the mortgage group's index of home-loan refinancings fell by 1.3 percent.
Refinancings are sensitive to slight changes in mortgage interest rates, which have edged higher recently. The refinance share of mortgage activity decreased to 63.2 percent of total applications from 65 percent the previous week, the bankers' group said. That's the lowest refinance share since the week ending Oct. 23.