Overall mortgage application volume picked up last week after several weeks of slowing, thanks to another drop in interest rates, the Mortgage Bankers Association reported today.

The market composite index, which measures total home loan application volume, gained 8.1 percent on a seasonally adjusted basis from the previous week. The greatest increase occurred in the index that tracks refinancings, which climbed 9.1 percent, followed by the purchase index, which grew 7.4 percent.

The refinance share of mortgage activity is now up to 39.9 percent of total applications, and the adjustable-rate mortgage (ARM) share has reached 22.5 percent, according to MBA.

Borrowing costs on long-term loans fell for the fourth straight week, with the average contract interest rate on 30-year fixed-rate mortgages sinking to 6.41 percent from 6.5 percent, the rate on 15-year fixed-rate loans dipping to 6.16 percent from 6.2 percent, and the average rate on one-year ARMs tumbling to 5.69 percent from 5.73 percent.

Points, or loan-processing fees expressed as a percent of the total loan amount, averaged 1.62 on the 30-year loans, 1.18 on the 15-year, and 1.09 on one-year ARMs. These points include the origination fee and 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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