Mortgage applications rebound

Price declines on 30-year fixed-rate mortgages generate new loans and more refinancing.

July 2, 2008: 8:09 AM EDT

WASHINGTON (AP) -- Mortgage application volume rose 3.6% during the week ended June 27, according to the trade group Mortgage Bankers Association's weekly application survey.

The MBA's application index rose to 477.7 during the week, bouncing back from a year-to-date low of 461.3.

Refinance volume increased 4.7% during the week, while purchase volume increased 2.8%. Refinance applications accounted for 36.8% of total applications, compared with 36.3% a week earlier.

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 477.7 means mortgage application activity is 4.777 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 as interest rates on fixed-rate mortgages declined. The average rate for traditional, 30-year fixed-rate mortgages fell to 6.33% from 6.39% the prior week.

The average interest rate for 15-year fixed-rate mortgages, often a popular option for refinancing a home, fell to 5.9% from 5.95%.

The rate for one-year adjustable-rate mortgages rose to 7.14% from 7.09%.