Mortgage interest rates have dropped to their lowest level in decades, and even with tight credit conditions, more borrowers are beginning to take advantage.
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The ""Mortgage Bankers Association"":http://www.mortgagebankers.org (MBA) reported Wednesday that its index measuring mortgage loan application volume increased 2.7 percent for the week ending August 27, 2010, after interest rates dropped yet again.
Refinance applications made up nearly 83 percent of last week's new mortgage activity, with total refinancing volume increasing 2.8 percent from the previous week.
[COLUMN_BREAK]MBA says refinancings are at their highest level since May 1, 2009.
The trade group's index of new purchases also rose, up 1.8 percent from one week earlier, but MBA says home purchase activity remains muted.
""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,"" according to Michael Fratantoni, MBA's VP of research and economics.
Based on MBA's market data, the average contract interest rate for 30-year fixed-rate mortgages decreased to 4.43 percent last week, down from 4.55 percent the week prior. The 30-year rate is a new low for the trade group's survey.
The average interest rate for 15-year fixed-rate mortgages fell to 3.88 percent from 3.91 percent one week earlier â€" another new low in MBA's survey.
Fratantoni explained that the drop in mortgage rates was in line with Treasury rates, which responded to indicators that ""continue to show weak economic growth and an exceptionally weak housing market.""