With the Federal Reserve's Operation Twist helping to push rates lower, mortgage refinance applications rose 11.2% last week compared to one week before, the Mortgage Bankers Association (MBA) reports.
The MBA's Market Composite Index, which measures overall application volume, increased 9.3% on a seasonally adjusted basis from one week earlier. The seasonally adjusted Purchase Index increased 2.6%, and the unadjusted index rose 2.2%.
‘With lower rates, refinance application volume increased to its highest level since August 19, 2011," says Mike Fratantoni, the MBA's vice president of research and economics.Â
"Purchase application volume also increased," he continues. "However, the increase was in conventional purchase applications, which were up by 4.9 percent. Purchase applications for government loans fell by 0.6 percent over the week, likely influenced by the pending decline in [Federal Housing Administration] loan limits.’
The refinance share of mortgage activity increased to 79.7% of total applications from 78.3% the previous week, making it the highest refinance share of mortgage activity since the survey's re-benchmark in January.
According to the MBA, the average loan size of all loans for home purchase in the U.S. was $212,700 in August – up from $211,200 in July. The average loan size for a refinance was $241,300, which is an increase from $209,200 in July.