A widely-watched measure of mortgage application activity rose 2.5 percent last week, driven almost entirely by an increase in refinancing interest from borrowers as mortgage rates continued to settle downward. The MBA's Market Composite Index registered 743.7 for the week ended April 11, up from 725.6 one week earlier. The application index is calibrated to March 16, 1990; a reading of 743.7 means that application activity was roughly 7.4 times greater than when the index was first established. Application activity diverged pretty sharply, however, between applications and refinancing -- refinances jumped 5.2 percent, the MBA reported, while purchase application activity fell 0.8 percent. For HW readers' backgound, it's worth noting that most economists place more emphasis on purchase activity as an indicator of economic health; the idea is that purchases are a more direct indicator of the health of a housing market than refinancings are, which can be motivated by a number of different factors. FHA application activity remained strong as well, rising 3.5 percent as borrowers find that the revitalized housing agency is one of the few still lending at higher loan-to-value ratios. Refinance share of overall mortgage activity increased to 53.5 percent of total applications, the MBA said, from 52.2 percent the previous week; ARM-share of activity decreased to 6.0 from 6.5 percent of total applications from the previous week, reflecting consumer's strong preference for fixed-rate product. I remember during the boom years, BTW, when ARM share was regularly more than a quarter of all loan applications.