Mortgage Borrowers Hit the Streets

Updated from 9:59 a.m. EDT

Mortgage applications jumped almost 20% in the week ended July 2, as national average interest rates dropped and consumers ended their fence-sitting after the Federal Reserve Board raised short-term interest rates by 25 basis points.

The Mortgage Bankers Association, a trade group, said that its index of mortgage loan applications rose 19.5% from the week before on a seasonally adjusted basis, with purchase applications up 15% and refinancing applications up 27.6% from the week before.

While the pickup in activity was expected after the long run-up to the Fed's rate hike, mortgage applications for the week were still down 34.1% from the same period a year ago. The market had ample notice of the Fed's intention to raise rates and may have overreacted in advance, especially given a spate of disappointing economic reports last week. ...