Mortgage Applications Increased Last Week because of more Refinance Activity

By Stevie Duffin Updated on 9/25/2013

The number of mortgage applications increased last week because of more refinance activity and the drop in the 30 year fixed interest rate (46 basis points off its 2011 high).

According to the Mortgage Bankers Association, the composite index rose 8.2% on a seasonally adjusted basis for the week ending May 6, 2011.

The index rose 8.3% from the earlier week based on an adjusted basis. The refinance index climbed 9% to the highest level in nearly two months.This is great news for the mortgage industry as a whole. In 30 day moving averages, the market index is up 2.9%, with the purchase index up 0.4% and the refinance index 4.3% higher.

Federal Reserve has continued its QE2 asset purchase program and hence the rates have been dropping all of last week. The 30-year fixed mortgage rate is now 46 basis points lower than its 2011 high, and has moved down 4 consecutive weeks by a total of 31 basis points. Over this four-week period, the refinance index has increased by about 18 percent. Despite the recent rise however, refinance application volume remains about half (50% below) levels of last fall.

Refinancings accounted for 63.1% of all mortgage applications last week up from 62.7% the previous week and at the highest level in more than a month.

The MBA said the average interest rate for a 30-year fixed mortgage fell to 4.67% last week from 4.76% a week prior. The average rate for a 15-year fixed mortgage declined to 3.81% from 3.96%.

Last November, the rate for a traditional, 30-year mortgage nearly fell below 4% and the 15-year, fixed rate was about 3.64%.