Lower rates stoke mortgage apps

Mortgage application volume grew 2.2 percent last week as borrowers took advantage of lower interest rates, the Mortgage Bankers Association reported today.

The increase, which is seasonally adjusted from one week prior, was driven by a 3.2 percent rise in purchase applications, followed by a 0.9 percent gain in refinance applications. The group reported that its Government Purchase Index, comprised largely of FHA loan applications, jumped 9.9 percent.

The average rate on a 30-year fixed-rate mortgage fell to 5.99 percent last week from 6.07 percent the week before, and the average rate on 15-year fixed loans declined from 5.82 percent to 5.71 percent. Rates on one-year adjustable-rate mortgages (ARMs) stayed at 6.6 percent.

Although borrowing costs dropped, the survey indicated that fewer homeowners are refinancing out of their ARM loans into fixed-rate loans -- and fewer still are taking out ARM loans to buy homes. MBA reported that the refinance share of applications dipped to 43.4 percent and the ARM share slipped to 2.3 percent.

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