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Mortgage rates down, applications up

With mortgage rates down, people are on the move this summer.

With mortgage rates down, people are on the move this summer.

With mortgage interest rates low and mortgage application activity increasing at the beginning of August, moving companies can expect the dog days of summer will be busy.

Uncertainty over debt ceiling negotiations apparently had little effect on prospective homebuyers during the week ending July 29, as mortgage application volume increased 7.1 percent, according to the Mortgage Bankers Association. While refinance activity accounted for 70.1 percent of applications, the Purchase Index increased 5.2 percent from the previous week.

Passage of a bill to raise the debt ceiling eliminated fears that interest rates would spike after a U.S. default, and mortgage rates fell to an 8-month low during the week that saw a resolution of the crisis. The rate for a 30-year fixed loan fell to 4.39 percent, and the rate for a 5-year adjustable loan decreased to 3.18.

Frank Nothaft, vice president and chief economist for Freddie Mac, said news that second quarter growth was lower than expected and that consumer spending was down caused rates to drop.

While lower interest rates might be the result of negative economic indicators, they are good news for house hunters eager to lock in favorable loan terms.