Submitted by CARPE DIEM

WASHINGTON — The Federal Reserve is considering contingency plans for expanding its lending power in the event its recent steps to unfreeze credit markets fail. WASHINGTON — Mortgage applications in the U.S. rose last week as purchases and refinancing increased. The Mortgage Bankers Association’s index of applications to buy a home or refinance a loan rose 5.4% to 725.6 from 688.3 the prior week. The group’s purchase index gained 8.1% percent and its refinancing gauge increased 3.4%.Lower prices have made homes more affordable and rates on fixed mortgages have retreated over the last month after the Federal Reserve cut the benchmark and pumped money in credit markets.

Note: Through February, real estate loans at commercial banks (Fed data here) are at an all-time high, and increased almost 10% (annual rate) compared to January.

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