Record Low Mortgage Rates Spur Refinancing

Washington, DC, Oct. 13, 2010--Mortgage application volume increased for the first time in six weeks, according to the Mortgage Bankers Association weekly applications survey.

Applications rose 14.6% for the week ending Oct. 8 on the strength of interest in refinancing.

The refinance index increased 21% from the previous week, but the seasonally adjusted purchase index dropped 8.5% after gains last week.

Michael Fratantoni, vice president of research and economics at the MBA, said applications for conventional purchase mortgages are at their highest level since the beginning of May, just after the expiration of the homebuyer tax credit.

"After five weeks of steadily declining rates to yet another new low, borrowers who had been on the fence jumped off, which factored into refinance activity surging more than 20%.

The refinance share of mortgage activity increased to 83.1% of the total applications, up nearly five percentage points from 78.9% last week.

Rates for the 30-year fixed-rate mortgage decreased to 4.21%, the lowest rate on record.

The 15-year rate dropped to 3.62%.