Mortgage applications increase on more refinancing

Refinancings fueled a 0.9 percent increase in mortgage applications this week as interest rates hit their lowest levels in months.

Applications to refinance increased 4 percent from the previous week while the purchase index fell 3 percent, the Mortgage Bankers Association’s (MBA) said Wednesday in its weekly survey.

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The number of applications is running significantly behind last year's pace with refinancing volume down 65 percent and purchases running 10 percent lower.

The refinance share of mortgage activity increased to 52 percent of total applications from 50 percent the previous week. 

“Renewed concerns about the state of the global economy, particularly in Europe, led to a flight to quality to U.S. Treasury securities, thereby pushing interest rates down in the U.S.,” said Mike Fratantoni, MBA’s chief economist.  

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.33 percent, the lowest rate since November.

The rate for 30-year fixed-rate jumbo loans (greater than $417,000) decreased to 4.24 percent, the lowest rate since May 2013, from 4.29 percent.

For 30-year fixed-rate mortgages backed by the FHA the rate decreased to 4.06 percent, the lowest rate since October.

Meanwhile the rate on 15-year fixed-rate mortgages decreased to 3.43 percent, also the lowest rate since October.