Mortgage application volume jumped 48.1 percent last week following the Federal Reserve’s move to cut two key short-term interest rates, the Mortgage Bankers Association reported today.

According to MBA, the seasonally adjusted increase was led by an 82.2 percent spike in the index that tracks refinance applications, followed by a 10.6 percent gain in the purchase-loan index.

As a result, the refinance share of loan applications hit 62 percent, up from 49.7 percent at mid-month.

"The Federal Reserve acted last week to bring some stability to the mortgage-backed securities market and we saw an immediate impact with a drop in mortgage rates," Jay Brinkmann, MBA’s vice president of research and economics, said in a statement. "With a drop in the 30-year fixed rate of at least a quarter of a point, we saw a sharp increase in refinance applications, but applications for home purchases also increased over where they have been the last few weeks, although still below where they were this time last year."

The average interest rate on 30-year fixed-rate mortgages last week sank to 5.74 percent from 5.98 percent at mid-month, and the 15-year fixed-rate average dipped to 5.23 percent from 5.24 percent. The points that borrowers paid to attain these rates averaged 1.13 on the 30-year loans, up from 0.9 in last week’s survey, and 1.15 on the 15-year loans, up from 0.97.

Costs for adjustable-rate mortgages (ARMs) continued to climb, with the average rate on one-year ARMs rising to 7.02 percent from 6.99 percent and average points gaining from 1.64 to 1.71. As a result, the ARM share of applications last week tumbled from 7.9 percent to 3.8 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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