Dropping loan rates boost mortgage applications

“In particular, refinance applications increased sharply, with some lenders seeing refinance volume double,” he said.

“Despite this surge, aggregate refinance activity is still below levels reported two weeks ago”

He said some lenders are seeing an increase in HARP loans, but that it represents a small portion of the increase this week. 

The four-week moving average, a better gauge of activity, was down 3.2 percent. The average is up 3.33 percent for purchases and down 5.13 percent for refinancing.

The refinance share of mortgage activity increased to 76 percent of total applications from 73.9 percent the previous week. 

In November, among refinance borrowers, 52.9 percent of applications were for fixed-rate, 30-year loans, 26.2 percent for 15-year, fixed loans and 5.8 percent for adjustable-rate mortgages (ARMs). 

For applications for home purchase, 85.5 percent were for fixed-rate, 30-year loans, 6.8 percent for 15-year, fixed loans and 5.9 percent for ARMs, the second lowest ARM share for purchases since January.

The average contract interest rate for 30-year, fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 4.18 percent, the lowest rate since Sept. 30, from 4.21 percent.

The average contract interest rate for 30-year, fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 4.52 percent, the lowest rate since Sept. 30, from 4.55 percent.

For 30-year, fixed-rate mortgages backed by the FHA, the average contract rate decreased to 3.98 percent, the lowest rate since January.