Thanks to lower interest rates, mortgage application volume rose 13% for the week ending February 18, according to new figures compiled by the Mortgage Bankers Association.
The trade group reported that refinancings are on the rise again, accounting for almost 66% of all new business, a 17% jump based on the trade group's application index.
For all of 2010, refis accounted for roughly 65% of loan production, according to figures compiled by National Mortgage News and the Quarterly Data Report.
"Ongoing turmoil in the Middle East brought interest rates lower last week," said Michael Fratantoni, MBA's vice president of research and economics.
"Borrowers took advantage of these lower rates, bringing application activity back near levels from two weeks ago, following sharp declines last week."
However, mortgage bankers continue to be nervous about declining loan production this year, especially in the refi space.
Scott Buchta, an analyst with Braver Stern noted that application activity "remains muted by historical standards," adding that Federal Housing Administration loan refi activity is "well below historical averages."
He added that, "The effective FHA rate dropped 5 basis points to 5.61% and when you factor in increased MIP fees over 85% of the GNMA universe is out of the refinancing window."
The average contract interest rate for 30-year fixed-rate mortgages fell 12 bps to 5.00%, with points increasing from 0.85 to 0.97 (including the origination fee) for 80% loan-to-value ratio loans.
The average contract interest rate for the 15-year FRM decreased from 4.34% to 4.28%. Points fell from 0.85 to 0.80.
