) -- Mortgage applications spiked 13% last week, the biggest gain in three months, as homeowners refinanced to take advantage of low
The average rate on a 30-year fixed mortgage edged lower to 4.51% in the week ended June 10, down from 4.54% in the prior week, remaining well below the psychological benchmark of 5%.
A total of 70% of all loan applications last week were for refinancing existing mortgages, up from 67.3% in the prior week.
"Mortgage rates have declined for eight of the past nine weeks. Coming off of the Memorial Day holiday, refinance application volume increased significantly, as borrowers jumped to lock in the lowest mortgage rates since last November," said Michael Fratantoni, MBA's vice president of research and economics.
The housing sector is well off its year-ago spring peak,
, and is only slightly higher than at the beginning of 2010. Whereas other sectors have begun a rebound in earnest, the housing sector continues to lag.
A report due later Wednesday from the National Association of Homebuilders that measures builder confidence is expected to come in unchanged for June.
measures builder perceptions of current single-family home sales and sales expectations for the next six months. It has held steady at a reading of 16 for six of the past seven months.
Any reading below 50 indicates poor sentiment. The index hasn't been above 50 since April 2006.
On Thursday, the Commerce Department is expected to say that homebuilders began construction on 3.3% more homes in May, while applications for building permits fell 0.5% month over month. Building permits are viewed as an indication of future home construction.
Stocks in the homebuilder sector were mostly flat in premarket trading Wednesday, including the
SPDR S&P Homebuilders
iShares Dow Jones US Home Construction
, exchange-traded funds that tracks the sector. The ETFs remains around 60% and 70%, respectively, off their early 2006 peaks.
The sector mostly gained on Tuesday ahead of this week's housing data with
, as well as small-cap builders
, leading the group higher.
-- Written by Miriam Marcus Reimer in New York.
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