U.S. mortgage applications surged by the largest amount on record last week as a new Federal Reserve program pushed interest rates down to their lowest level in more than 3 years, data from an industry group showed on Wednesday.
The U.S. housing market is suffering the worst downturn since the Great Depression as a huge supply of unsold homes, tighter lending standards and record foreclosures push down home prices.
But, the latest weekly data from the Mortgage Bankers Association showed potential borrowers were lured by enticing mortgage rates, which dropped dramatically after the Federal Reserve unveiled a plan last week to buy up to $500 billion of mortgage securities backed by government-sponsored enterprises, Fannie Mae, Freddie Mac, and Ginnie Mae.
“This clearly was an early holiday gift from the Federal Reserve to mortgage holders and home shoppers,” said Mike Larson, a real estate and interest rate analyst at investment firm Weiss Research in Jupiter, Florida.
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