Mortgage applications rise 7 percent as rates fall

WASHINGTON (AP) -- Applications for home loans rose in July as consumers raced to refinance at the lowest rates in decades. The Mortgage Bankers Associations said that overall applications increased nearly 7 percent from a week earlier. While they have been increasing in recent weeks, they remain below early 2009 levels.

Applications to refinance home loans were up 9 percent to the highest level since May 2009. But new mortgages taken out to purchase homes fell 2 percent. Those applications have fallen in eight out of the last nine weeks, after government tax credits that spurred home sales ended on April 30. Applications were 35 percent below last year's levels.

The average rate for a 30-year fixed loan sank to 4.58 percent last week, according to Freddie Mac. That was the lowest since the mortgage company began keeping records in 1971. Mortgage rates have fallen since mid-April. Investors, nervous about Europe's debt crisis and the global economy, have shifted money into safe Treasury bonds. That has caused the yields on those bonds to fall. Long-term fixed mortgage rates tend to track those yields. Applications to refinance loans made up 79 percent of total applications, the highest share of refinancing activity since April 2009. The Mortgage Bankers Association's survey covers more than 50 percent of all applications nationwide and has been conducted since 1990.