Applications for home-purchase loans and refinancings increased last week as interest rates dipped, the Mortgage Bankers Association reported today in its weekly survey.

The market composite index, a measure of mortgage loan application volume, increased 3.6 percent, growing to 680.7 on a seasonally adjusted basis from 657.2 one week earlier. Refinancings posted a 4.9 percent gain over the previous week, while the index that tracks new purchase loans increased by 2.6 percent.

Borrowing costs were down last week across all loan types, with the average contract interest rate for 30-year fixed-rate mortgages sliding to 6.1 percent from 6.14 percent, the 15-year fixed rate down from 5.83 percent to 5.82 percent, and the one-year adjustable-rate mortgage (ARM) sinking from 5.79 percent to 5.71 percent.

Points, which are loan-processing fees expressed as a percent of the total loan amount, averaged 1.48 on the 30-year loans, 1.25 on the 15-year, and 0.73 on one-year ARMs. Statistics, which include the origination fee, are based on loan-to-value ratios of 80 percent.

According to the MBA, the refinance share of mortgage activity now stands at 41.8 percent of total applications, up from 41.5 percent the previous week, while the ARM share of activity increased to 18 percent from 17.9 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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