NEW YORK, April 26 (Reuters) - U.S. mortgage application activity rose to a five-week high as the borrowing costs on 30-year home loans decreased to their lowest levels in five months, Mortgage Bankers Association data released on Wednesday showed.
The Washington-based industry group said its measure on mortgage applications rose 2.7 percent to 406.2 points in the week ended April 21.
The interest rates on 30-year, fixed-rate conforming mortgages, the most widely held type of U.S. home loan, dipped 2 basis points to 4.20 percent, the lowest since the week of Nov. 18. The average rate was 4.23 percent a week ago.
Conforming loans are those with balances of $424,100 or less which qualify for guarantees from federal mortgage agencies Fannie Mae and Freddie Mac.
Mortgage rates have fallen in step with U.S. Treasury yields, which hit five-month lows last week as a result of safe-haven bids for U.S. government debt due to geopolitical tensions with Syria and North Korea, and uncertainty over the outcome of the French presidential election last Sunday.
Doubts about whether U.S. President Donald Trump and a Republican-controlled Congress would be able to enact tax cuts and infrastructure spending while loosening regulations to boost the economy had also bolstered demand for bonds.
This week, Treasury yields have risen as investors have pared their safe-haven bond holdings on expectations that centrist Emmanuel Macron would beat far-right and anti-EU Marine Le Pen in the French presidential runoff on May 7.
On Wednesday, U.S. Treasury Secretary Steve Mnuchin said the White House plans to introduce its plan to slash corporate tax rate to 15 percent and to lower the tax on offshore earnings to 10 percent from the current 35 percent.
The recent drop in mortgage rates has revived interest from homeowners to refinance their mortgages.
MBA's seasonally adjusted gauge of applications to refinance an existing home loan rose 7.2 percent to 1,365.8, a five-week high.
The refinancing share of overall mortgage activity increased to 44.0 percent from 42.4 the prior week, while the average loan size for refinance applications increased to its highest level since September 2016 at $266,900.
The mortgage industry group said its seasonally adjusted gauge of application activity to buy a home, a proxy for future home sales, fell 1.0 percent to 236.0, a five-week low.
The share of applications for adjustable-rate mortgages grew to 8.7 percent from 8.4 percent the preceding week.
Reporting by Richard Leong; Editing by Chizu Nomiyama