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Mortgage Activity Up Despite Rates

Consumers rush to lock in rates ahead of the Fed meeting and new school year.

Mortgage loan applications jumped in the final week of April as homebuyers rushed to beat the


as well as the start of a new school year.

The Mortgage Bankers Association Wednesday said its index covering mortgage purchases and refinancings increased 4.4% from a week earlier. On an unadjusted basis, the index was down 35.3% from a year ago, when rates were lower.

Mortgage experts attribute the rise in applications to consumers attempting to beat a Fed decision to raise short-term lending rates, which would in turn spur an increase in long-term market interest rates such as the 10-year Treasury note, on which most mortgage rates are based. The Fed kept rates steady at its policy meeting yesterday, but signaled to the markets its future intention to raise rates to stem inflationary pressures.

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Adam Salti, vice president of First Fidelity Mortgage Group, however, says last week's rise is more of a seasonal issue than a Fed-related one.

"Spring is the start of the home-buying season and people want to process their loans and get settled ahead of the start of school in September," says Salti. "The Fed plays less of a role than people think."

The average rate for 30-year fixed-rate mortgages increased to 6.10% from 6.01% one week earlier, while the average interest rate for 15-year fixed-rate mortgages increased to 5.44% from 5.27%.

The average rate for one-year Adjustable Rate Mortgages, or ARMs, increased to 3.69% from 3.67%.

The refinance share of mortgage activity remained unchanged at 44% of total applications.