Overall mortgage application volume picked up last week as rates on long-term loans declined, the Mortgage Bankers Association reported today.

The market composite index, a measure of home loan application volume, rose 3.2 percent last week, gaining to 626.1 on a seasonally adjusted basis from 606.6 one week earlier.

The index that tracks home purchases reversed three weeks of losses, climbing 5.2 percent from mid-month, while the refinance index increased 1.2 percent.

Despite the gains, the refinance share of mortgage activity dropped to 43.2 percent of total applications from 44.9 percent the previous week, and the adjustable-rate mortgage (ARM) share of activity decreased to 21.1 percent.

Borrowing costs on 30- and 15-year fixed-rate mortgages dipped last week, falling to an average 6.16 percent and 5.84 percent, respectively. The average on the one-year ARM jumped to 5.92 percent from 5.81 percent the week before.

Points, which are loan-processing fees expressed as a percent of the total loan amount, averaged 1.05 on the 30-year loans, 1.19 on the 15-year, and 0.77 on one-year ARMs. Statistics are based on loan-to-value ratios of 80 percent.

The Mortgage Bankers Association survey covers approximately 50 percent of all U.S. retail residential mortgage originations, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.

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