Interest in refinancing among borrowers led to a huge jump in application activity last week, as rates fell amid an easing of selling pressure in key parts of the secondary market for mortgages. According to statistics released Wednesday morning by the Mortgage Bankers Association, a composite index of overall application activity surged by 48.1 percent to 965.9 for the week ended March 21. The application index is calibrated to March 16, 1990; a reading of 965.9 means that application activity was roughly 9.6 times greater than when the index was first established. Driving the rebound was a huge increase in refinancing activity — the MBA reported that applications to refinance shot up by 82.2 percent compared to one week earlier, while an index of purchase activity increased 10.7 percent. FHA application activity remained strong, increasing 10.1 percent as well; borrower interest in FHA loans has been high throughout most of March, according to MBA’s statistics. “The Federal Reserve acted last week to bring some stability to the mortgage-backed securities market and we saw an immediate impact with a drop in mortgage rates,” said Jay Brinkmann, MBA’s vice president of research and economics. “With a drop in the 30-year fixed rate of at least a quarter of a point, we saw a sharp increase in refinance applications, but applications for home purchases also increased over where they have been the last few weeks, although still below where they were this time last year.” Reflecting the rebound in refinancing interest, the refinance share of total mortgage activity increased to 62.0 percent of total applications from 49.7 percent the previous week, the MBA reported. Borrowers looking to take out adjustable-rate mortgages continued to plummet, however, as most are flocking to fixed-rate products — ARM share of activity decreased to 3.8 from 7.9 percent of total applications from the previous week. For more information, visit http://www.mortgagebankers.org.
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