Refinancing activity hit its highest level since November amid declining mortgage rates this past week, according to a report released Wednesday by the Mortgage Bankers Association. The Market Composite Index, a measure of aggregate mortgage loan application volume, was 981.5 for the week ended January 18 -- an increase of 8.3 percent on a seasonally adjusted basis from 906.4 one week earlier. The index was up 11 percent versus the same week one year ago, the MBA said. The application index is calibrated to March 16, 1990; a reading of 981.5 means that application activity is nearly 10 times greater than when the index was first established. Refinancing application activity jumped 16.9 percent, the MBA said; purchase activity actually decreased 4.6 percent, driven primarily by a drop in conventional applications. Interest in refinancing has skyrocketed among borrowers to start 2008, as mortgage rates have fallen to lows last seen since the housing boom in 2005. The jump doesn't directly translate into mortgage fundings, according to Jay Brinkmann, vice president of research and economics at the MBA. “With tighter credit conditions we do not know how many of these applications will become loans," he said, "but it is clear that borrowers are responding to the 40-80 basis point drop in rates we have seen since November 2 across products." Not surprisingly, refinance share of mortgage activity increased to 66.0 percent of total applications, the MBA said, up from 62.7 percent the previous week. ARM share also increased slightly to 9.3 percent, from 9.2 percent one week earlier. For more information, visit