Mortgage Rates Update: Home Refinance Rise As Mortgage Interest Rate Fall

US mortgage applications increased last week as homeowners took advantage of historically low interest rates, industry data showed Wednesday. The US Home loan refinance demand rose for a fifth week in a row.

According the Mortgage Bankers Association’s (MBA) survey for the week ended August 27 showed average mortgage rate increased 2.7% on a seasonally adjusted basis from one week earlier.

Michael Fratantoni, MBA’s Vice President of Research and Economics, said:

“Despite the slight increase in purchase activity in the past week, the continued low level of purchase applications indicates we are unlikely to see an increase in new home sales reported for August or existing home sales reported for September.”

The MBA’s Refinance Index increased 2.8% from the previous week and is at its highest level since May 2009. The seasonally adjusted Purchase Index increased 1.8 percent from one week earlier.

The average contract interest rate for 30-year fixed-rate mortgages dropped to 4.43% during the final full week of August, down from the 4.55% seen during the prior seven-day period. The 15-year fixed mortgages rate also dropped to 3.88% to 3.91%, a record low. Rates on one-year adjustable-rate mortgage or ARM, dropped to 6.95%t from 6.84%.

“Refinancing activity picked up again last week, reaching new 15-month highs, as borrowers took advantage of even lower mortgage rates. The drop in mortgage rates was in line with Treasury rates as the latest data continue to show weak economic growth and an exceptionally weak housing market,” Fratantoni said.

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