Refi Activity Hits Highest Level Since August

By Drew FitzGerald

The number of mortgage applications filed in the U.S. last week jumped 23% from the prior week, the Mortgage Bankers Association said Wednesday, as a surge in refinance applications drove new loans.

Refinance activity climbed 26%, its highest level since August, according to the MBA’s weekly survey, which covers more than three-quarters of all U.S. retail residential mortgage applications. Purchasing rose by a seasonally adjusted 10% during the week ended Friday.

Interest rates reached new lows near the end of 2011, but the flow of new mortgages has varied from week to week.

MBA Vice President Michael Fratantoni said ongoing worries about the economic situation in Europe continued to push down U.S. interest rates last week. ”With mortgage rates reaching new lows, refinance volume jumped,” he said. “Purchase activity also increased as buyers returned to the market after the holiday season.”

European Pressphoto Agency
Low mortgage rates have helped spur refinancing activity. Shown here are rates advertised in December.

The four-week moving average for all mortgage applications is up 6%, mostly due to last week’s volume jump.

The share of applications filed to refinance an existing mortgage increased to 82.2% of total applications, from 80.8% the previous week, the highest level since October 2010.

Adjustable-rate mortgages made up 5.6% of activity last week, up from 5.4% a week earlier.

The average rate on 30-year fixed-rate mortgages with conforming loan balances dropped to 4.06% from 4.11%, while rates on similar mortgages with jumbo loan balances increased to 4.4% from 4.34%. The average rate on FHA-backed 30-year fixed-rate mortgages slipped to 3.91% from 3.96%.

The average for 15-year fixed-rate mortgages fell to 3.33% from 3.4%, while the 5/1 ARM average stayed flat at 2.9%.

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