U.S. Mortgage Applications Jump To Highest Level In A Year On Lower Rates (Courtney Schlisserman)

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By Courtney Schlisserman

Dec. 13 (Bloomberg) -- Mortgage applications in the United States jumped last week to the highest level in more than a year as lower mortgage rates spurred home purchases and refinancing.

The Mortgage Bankers Association's index of applications to buy a home or refinance an existing loan rose 11.4 percent to 721.2, the highest since October 2005. The increase followed an 8.1 percent rise in the prior week.

Tumbling mortgage rates and cheaper homes are spurring housing demand, driving applications for loans to purchase real estate to a 10-month high. The data suggest the ``substantial'' weakening of the housing market the Federal Reserve cited in a statement yesterday is nearing an end.

``The end is in sight,'' Doug Duncan, chief economist of the mortgage bankers group, said in an interview. ``There's a series of things that seem to be indicating the worst is over,'' he said, citing shrinking inventory of unsold homes and a stabilization in the rate of new-home sales.

The Mortgage Bankers Association's purchase index rose 8.7 percent last week to 463.8, the second-highest level this year, from 426.6. The measure of refinancing increased 15.8 percent to 2304.4, the highest since September 2005, from 1989.7.

A separate report today showed retail sales rose more than forecast in November. The 1 percent increase was the first in four months, according to the Commerce Department. Sales excluding motor vehicles rose by the most since January.