The submission of mortgage applications increased last week when interest rates decreased, fueling refinancing activity.
The average rate for traditional, 30-year fixed-rate mortgages dropped from 4.96% to 4.89% in only a week, according to the MBA report.
The average rate for 15-year fixed-rate mortgages dipped from 4.54% to 4.52% in a week. One-year adjustable-rate mortgages fell to 6.20% from 6.21%.
In an effort to save the housing market, the Federal Reserve said in November that it would buy up to $500 billion in mortgage-backed securities. Since then, interest rates have plummeted.
The Mortgage Bankers Association said Wednesday its weekly application index climbed 21.2% for the week ended March 13. The index came in at 876.9, up from 723.4 a week earlier. On an unadjusted basis, the index rose 20.7% compared with the previous week, the trade group said.
An estimated 72.9% of applications came from borrowers wanting to refinance their current home loans at lower rates, rather than purchase a new home. The week before, the refinance rate was at 67.9%, the MBA said.
The application index remains below its peak of 1,856.7, which was reached in May 2003 at the height of the housing boom. The survey provides a snapshot of mortgage lending activity involving mortgage bankers, commercial banks and thrifts. It covers about half of all new residential mortgage loans made each week.
An index value of 100 is equal to the application volume on March 16, 1990, the first week the MBA tracked application volume.
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