Refinancings fuel mortgage application surge

Mortgage Bankers Association says the volume of applications filed last week rose 7.5%.


January 30 2008: 9:47 AM EST


WASHINGTON (AP) -- Mortgage application volume rose 7.5% during the week ended Jan. 25, according to the trade group Mortgage Bankers Association's weekly application survey.

The MBA's application index rose to 1,054.9 from 981.5 the previous week.

Application volume was pushed higher by a jump in refinance volume. Refinance application volume increased 22.1%, while purchase volume tumbled 17.7%. Refinance applications accounted for 73% of total applications.

The index peaked at 1,856.7 during the week ending May 30, 2003, at the height of the housing boom.

An index value of 100 is equal to the application volume on March 16, 1990, the first week the MBA tracked application volume. A reading of 1,054.9 means mortgage application activity is 10.549 times higher than it was when the MBA began tracking the data.

The survey provides a snapshot of mortgage lending activity among mortgage bankers, commercial banks and thrifts. It covers about 50% of all residential retail mortgage originations each week.

Application volume rose despite an increase in interest rates. The average rate for traditional, 30-year fixed-rate mortgages rose to 5.6% from 5.49%. The average rate for 15-year fixed-rate mortgages, which are often used to refinance, rose to 5.04% from 4.95%.

Average rates for one-year adjustable rate mortgages increased to 5.7% from 5.51%.