Purchase loan applications were at their highest level in nearly eight years because of rising interest rates, according to the Mortgage Bankers Association.

The MBA's market composite index for the week ended Jan. 19 increased 4.5% on a seasonally adjusted basis from one week earlier. This week's results included an adjustment for the Martin Luther King Day holiday.

The seasonally adjusted purchase index increased 6% from one week earlier to its highest level since April 2010. The unadjusted purchase index increased 2% compared with the previous week and was 7% higher than the same week one year ago.

Purchase apps jump

Although the refinance index increased 1% from the previous week, it was the first time in eight weeks that more purchase applications were received than refis.

The refinance application share decreased to 49.4% from 52.2% the previous week.

Adjustable-rate loan application activity remained unchanged at 5.2%, while the share of Federal Housing Administration-guaranteed loans decreased to 11.4% from 11.7% the week prior.

The share of applications for Veterans Affairs-guaranteed loans increased to 10.9% from 10.7% and the U.S. Department of Agriculture/Rural Development share remained unchanged at 0.8%.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) increased 3 basis points 4.36%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $453,100), the average contract rate increased 6 basis points 4.31%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased 7 basis points to 4.37%, while for 15-year fixed-rate mortgages the average increased 4 basis points to 3.81%.

The average contract interest rate for 5/1 ARMs increased to its highest level since April 2011, 3.7%, from 3.62%.

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