Despite a surge in refinance applications, total mortgage loan application volume fell 1.5 percent for the weekending May 14, 2010, due to a drastic plunge in purchase applications, the ""Mortgage Bankers Association"":http://www.mortgagebankers.org/default.htm (MBA) reported Wednesday.
[IMAGE]According to MBA's Weekly Mortgage Applications Survey, the purchase index tumbled 27.1 percent from one week earlier, marking the lowest level observed in the survey since May of 1997.
[COLUMN_BREAK]""Purchase applications plummeted 27 percent last week and have declined almost 20 percent over the past month, despite relatively low interest rates,"" said Michael Fratantoni, MBA's VP of research and economics. ""The data continue to suggest that the tax credit pulled sales into April at the expense of the remainder of the spring buying season.""
The story was different for refinance applications, though. MBA said the refinance index jumped 14.5 percent from the previous week, hitting the highest level observed in nine weeks. As a result, the refinance share of mortgage activity increased to 68.1 percent of total applications, up from 57.7 percent the week before.
Fratantoni said refinance borrowers reacted to the week-to-week drop in interest rates. According to MBA, the average contract interest rate for 30-year fixed-rate mortgages decreased to 4.83 percent from 4.96 percent, and the average rate for 15-year fixed-rate mortgages dipped down to 4.19 percent from 4.32 percent.