Demand for mortgages picked up a seasonally adjusted 13.6 percent from the week before as mortgage rates eased during the week ending April 16, the Mortgage Bankers Association said today in releasing the results of its Weekly Mortgage Applications Survey.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 5.04 percent from 5.17 percent for 80 percent loan-to-value (LTV) ratio loans. Although points increased to 0.98 from 0.91 (including the origination fee), the effective rate still decreased from last week.

Michael Fratantoni, MBA’s vice president of research and economics, said mortgage rates followed Treasury rates down last week, helping boost refinance applications.

Purchase applications continued to increase coming out of the Easter holiday, as the window for claiming the homebuyer tax credit approaches, Fratantoni said. Buyers must be under contract before May 1 and close before July 1 to claim the credit (see story).

An MBA index measuring demand for refinancings was up 15.8 percent from the week before, while the seasonally adjusted purchase index was up 10.1 percent from a week earlier and "modestly" from last month, Fratantoni said.

The average contract interest rate for 15-year fixed-rate mortgages with 80 percent LTVs was 4.34 percent, down from 4.45 percent the week before, with the effective rate also decreasing despite points increasing to 0.98 from 0.8.

The average contract interest rate for one-year ARMs decreased to 6.95 percent from 7.02 percent, with points increasing to 0.28 from 0.27 (including the origination fee) for 80 percent LTV loans.

At this time a year ago, one-year ARMs averaged 6.19 percent, 15-year fixed-rate mortgages were 4.46 percent, and 30-year fixed-rate loans averaged 4.73 percent.

In a forecast published April 12, MBA economists projected that rates on 30-year fixed-rate loans will rise for the next 10 consecutive quarters, to an average of 5.8 percent in the final quarter of 2010, 6.3 percent in the fourth quarter of 2011, and 6.6 percent in the fourth quarter of 2012.

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