Low Mortgage Rates Boost Refinancing

Washington, DC, May 23, 2012 --  Mortgage applications increased 3.8% last week from the previous week, according to the Mortgage Bankers Association.

The Refinance Index increased 5.6% from the previous week. This is the third consecutive weekly increase in the Refinance Index which, is at its highest level since February 10, 2012.

The seasonally adjusted Purchase Index decreased 3.0% from one week earlier to its lowest level since April 20, 2012.

The unadjusted Purchase Index decreased 3.6% compared with the previous week and was 4.2% lower than the same week one year ago.

“Continuing negative developments in the sovereign debt crisis in Europe, particularly in Greece and Spain, as well as the recent French elections, which have shifted political power in a manner that will likely show less support for European austerity, helped push the US 10 Year Treasury yield below 1.7% last week,” said Michael Fratantoni, MBA’s Vice President of Research and Economics.

The refinance share of mortgage activity increased to 76.6% of total applications from 74.9% the previous week.  This is the highest refinance share since March 2, 2012.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 3.93%, the lowest rate in the history of the survey.