Underscoring the effect lower rates have had on the primary mortgage market, the Mortgage Bankers Association said Wednesday morning that application activity surged to near a four-year high as borrowers made a beeline for refinancing applications in the past week. The MBA's Market Composite Index, which measures overall mortgage application activity, was 1054.9 for the week ended January 25, 2008 -- an increase of 7.5 percent on a seasonally-adjusted basis from one week earlier. Total activity increased 70.7 percent compared with the same week one year ago, the MBA reported. The application index is calibrated to March 16, 1990; a reading of 1054.9 means that application activity is more than 10 times greater than when the index was first established. Driving that bounce was a surge in refinance applications, which jumped 22.1 percent and was more than enough to offset a corresponding sharp drop in purchase application activity. Refinacing interest has been high to start the year, as mortgage rates have touched four-year lows in recent weeks. Those rates, however, have been extremely volatile during the past week. "Mortgage rates on Wednesday morning early rate sheets were 5 percent with zero points," said Andrew Horowitz, president of Huntingdon Valley, Penn.-based LMS Funding, in an email to HW. "[By Friday, that was] all the way back up to either 5.625 and possibly 5.75 for the same deal." Nonetheless, the MBA reported that refinance share of application activity reached 73 percent of all applications, up from 66 percent one week earlier; ARM share decreased to 8.6 percent from 9.3 percent of total applications. For more information, visit http://www.mortgagebankers.org.