Mortgage applications rose 4.9% last week as more borrowers refinanced at the lowest rates in decades, according to new figures released by the Mortgage Bankers Association.
The trade group noted that the gain was fueled by a 5.7% increase in refinancing applications. The number of loans taken out to purchase homes edged up by less than 1%. The figures are adjusted for seasonal factors.
Refinancing is at its highest level since May 2009 and makes up 82.4% of all new loan activity, its highest share since January 2009. MBA tracks activity through its proprietary application index.
MBA vice president Michael Fratantoni noted that in the past month the volume of refinance applications is up 26%. "With rates this low, many borrowers who refinanced in the past two years may well have an incentive to refinance again, and this is likely increasing refi application activity."
MBA reported that the average contract interest rate for a 30-year fixed rate mortgage decreased by five basis points to 4.55% from 4.60% the week prior. Points decreased to 0.89 from 0.92 (including the origination fee) for loans with an 80% loan-to-value ratio.
Meanwhile, the average contract interest rate for a 15-year FRMs fell by 8 bps during the week to 3.91% with points increasing to 1.64 from 1.05.
