Mortgage applications make huge jump

Mortgage applications soared last week on the largest increase in refinancing in more than three years as interest rates fell to all-time lows. 

Applications were up 16.6 percent for the week ended Sept. 28, while refinancing rose 20 percent from the previous week to the highest level since April 2009, the Mortgage Bankers Association (MBA) reported Wednesday. 

Purchases were also up, rising 4 percent from the previous week and up 11 percent from the same week last year as the housing market continues making strides. 

“Refinance application volume jumped to the highest level in more than three years last week as each of the five mortgage rates in MBA's survey dropped to new record lows in the survey,” said Mike Fratantoni, MBA’s vice president of Research and Economics. 

Nearly three weeks after Federal Reserve Chairman Ben Bernanke announced a third round of quantitative easing, mortgage interest rates have steadily declined. 

“Financial markets continue to adjust to QE3, as the ongoing presence of the Federal Reserve as a significant buyer of mortgage-backed securities applies downward pressure on rates," he said. 

The refinance share of mortgage activity increased to 83 percent of total applications from 81 percent the previous week, while the Home Affordable Refinance Program (HARP) share of refinance applications fell to 23 percent from 26 the prior week.

Interest rates declined across the board as the average contract interest rate for 30-year fixed-rate mortgages with loan balances of $417,500 or less decreased to 3.53 percent from 3.63.

Jumbo loans fell to 3.82 percent from 3.87. 

The average rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.37 percent from 3.44 while 15-year rates dropped to 2.90 percent from 2.98.

The rates for 5/1 ARMs decreased to 2.59 percent from 2.61.