In spite of increasing mortgage rates, the Mortgage Bankers Association reported today that mortgage application activity increased a seasonally-adjusted 2.4 percent last week on a weekly comparison basis. Overall applications were up 12.8 percent versus the same week last year. It looks like refinance activity surprisingly drove much of the recent increase:

The seasonally adjusted Refinance Index increased 4.6 percent to 1962.0 from 1876.6 the previous week and the seasonally adjusted Purchase Index increased 0.9 percent to 452.0 from 448.0 one week earlier … The refinance share of mortgage activity increased to 43.5 percent of total applications from 42.1 percent the previous week.

Not surprisingly, however, ARM activity continued to drop; the MBA reported that ARM share of applications fell to 12.6 percent from 13.2 percent of total applications one week earlier.