Mortgage applications up as loan rates hit record lows

Most people applied for home loans last week as mortgage interest rates dropped to record lows.

Mortgage applications increased 2.8 percent for the week that ended Sept. 21, driven by a 3 percent rise in refinancing, the highest level in six weeks, the Mortgage Bankers Association reported on Wednesday.

Purchases were up 1 percent. 

The housing market is gradually improving but despite all-time low rates, there are still several hurdles to clear before the market returns to healthy levels.

The refinance share of mortgage activity increased to 81.2 percent of total applications from the previous week, the highest level since early August.  

Interest rates on loans tracked by MBA fell to their lowest rates in the history of the survey.  

Rates for 30-year fixed mortgages with loan balances of $417,500 or less dropped to 3.63 percent from 3.72, while rates on jumbo loans decreased to 3.87 percent from 3.99, also the lowest rate in the history of the survey.

The rate for 30-year mortgages backed by the Federal Housing Administration decreased to 3.44 percent from 3.50, while 15-year rate mortgages decreased to 2.98 percent from 3.03. 

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