March 25, 2009

Mortgage applications surge in week

The volume of applications for U.S. mortgages increased sharply last week after the Federal Reserve said it would pump money into the market.

The Fed's decision to buy $750 billion in mortgage-backed securities dropped mortgage interest rates to low levels not seen in six decades, Orawin Velz, associate vice president of economic forecasting at the Mortgage Bankers Association said.

In the week ending March 20, the Market Composite Index, which measures mortgage loan application volume, rose from 876.9 to 1,159.4, a 32.2 percent jump, the MBA said.

The Refinance Index also increased, jumping 41.5 percent to 6,363.2, the MBA said.

The average interest rate for 30-year, fixed-rate mortgages decreased from 4.89 percent to 4.63 percent with points falling from 1.23 to 1.13, the organization said.

Rates for the average 15-year, fixed-rate mortgage fell from 4.52 percent to 4.48 percent. Points in 15-year, fixed-rate mortgages fell from 1.18 to 1.07.

The average interest rate for one-year adjustable rate mortgages rose in the week from 6.2 percent with an average 0.14 points to 6.22 percent with 0.15 points, the report said.

Overall, the drop offered a sizable refinance incentive for most homeowners sparking a pickup in refinance activity, Velz said.