A considerable drop in interest rates last week sparked a rush to refinance but did little to drive home purchases, the Mortgage Bankers Association reported today.

While rates on long-term loans fell an average of 21 basis points from the second week of October, MBA’s market composite index — which measures overall mortgage application volume — inched up only slightly during the period. Dragging the index was a 3.1 percent decline in the measure that tracks purchase loans, despite a 4 percent rise in the refinance index.

Average interest rates on 30-year fixed-rate mortgages dropped from 6.4 percent to 6.21 percent last week, while the average 15-year fixed fell from 6.09 percent to 5.86 percent and the rate on one-year adjustable-rate mortgages (ARMs) dipped to 6.1 percent from 6.17 percent.

Points, which are loan-processing fees expressed as a percent of the total loan amount, averaged 1.13 on the 30-year loans, 1.06 on the 15-year, and 0.92 on one-year ARMs — compared with 1.04, 1.03 and 0.94, respectively, in the previous week. These points include the origination fee and are based on loan-to-value ratios of 80 percent.

MBA reported that the refinance share of loan applications grew to 47 percent last week, compared with 45.3 percent the previous week, and the ARM share rose to 14.2 percent from 13.5 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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