Mortgage applications rise, loan rates fall

Mortgage applications were up last week, boosted by historically low loan rates that were driven down primarily by the uncertainty surrounding a resolution of scheduled tax hikes and spending cuts.

Applications increased for the fifth straight week, up 6.2 percent, fueled by an 8 percent jump in refinancing, the highest level since Oct. 12, the Mortgage Bankers Association (MBA) reported on Wednesday. 

"Continued uncertainty due to the lack of resolution regarding the fiscal cliff led interest rates lower last week, with mortgage rates reaching a new low in our survey,” said Mike Fratantoni, MBA’s vice president of research and economics.  

Purchases picked up 1 percent and overall applications are nearly 10 percent above the level they were at last year. 

The refinance share of mortgage activity increased to 84 percent of total applications from 82 percent the previous week, the highest level since January 2009. 

Rates on 30-year fixed-rate mortgages with balances at $417,500 or less decreased to 3.47 percent, from 3.52 percent, the lowest rate in the history of the survey.

The rate for 30-year loans with balances greater than $417,500 dropped to 3.77 percent from 3.79 percent. 

On 30-year mortgages backed by the Federal Housing Administration, rates fell to 3.32 percent from 3.34, another record-low rate. 

The average rate on 15-year-fixed mortgages decreased to 2.85 percent from 2.86, another all-time low.

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