[tag]Mortgage applications[/tag] in the U.S. increased last week to the highest level since April as borrowing costs close to a five-month low spurred refinancing. The Mortgage Bankers Association’s index of applications to buy a home or [tag]refinance an existing loan[/tag] rose 2 percent during the week to 595.8. The group’s gauge of refinancing jumped 9.5 percent to 1748.7, the highest since February. Purchases declined for the first time in three weeks.

A half-percentage-point decline in [tag]30-year fixed mortgage rate[/tag]s since the end of June may be helping keep the slowdown in housing from becoming a rout. Federal Reserve policy makers today are forecast to keep interest rates unchanged for a second month as they wait to see how the rest of the economy is affected by the weaker real estate market. “It’s an orderly and gradual slowdown” in housing, said Zoltan Pozsar, an economist at Moody’s Economy.com in West Chester, Pennsylvania. “Housing is hurting the economy just enough to keep price pressures at bay. The Fed should stop here. If it went further in raising rates, it’d hurt the economy.”

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