The Mortgage Bankers Association (MBA) has released its Weekly Mortgage Applications Survey for the week ending July 16, 2010. The Market Composite Index, a measure of mortgage loan application volume, increased 7.6 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 19.5 percent compared with the previous week, which included the Independence Day holiday. The Refinance Index increased 8.6 percent from the previous week and was the highest Refinance Index observed in the survey since the week ending May 15, 2009. The increase in total refinance applications was driven by a 10.7 percent increase in conventional refinance applications, while government refinance applications decreased by 4.2 percent. The seasonally adjusted Purchase Index increased 3.4 percent from one week earlier, driven by an 8.0 percent increase in government purchase applications. Conventional purchase applications were essentially flat, increasing just 0.3 percent from last week. The unadjusted Purchase Index increased 15.3 percent compared with the previous week and was 35.7 percent lower than the same week one year ago. "As rates on 30- and 15-year fixed-rate mortgages declined to the lowest levels recorded in the survey, refinance activity increased last week. The refinance index is up almost 30 percent over the past four weeks, but is still well below the peak seen last spring," said Michael Fratantoni, MBA's vice president of research and economics. "Refinance borrowers, aiming for the lowest possible rate, are getting conventional loans. The strength in purchase applications comes from government loans, likely indicating that prospective buyers are drawn by the lower downpayment requirements." The four-week moving average for the seasonally adjusted Market Index is up 4.9 percent. The four week moving average is down 1.3 percent for the seasonally adjusted Purchase Index, while this average is up 6.5 percent for the Refinance Index. The refinance share of mortgage activity increased to 79.4 percent of total applications from 78.7 percent the previous week. This was the highest refinance share observed in the survey since April 2009. The adjustable-rate mortgage (ARM) share of activity decreased to 5.2 percent from 5.5 percent of total applications from the previous week. The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.59 percent from 4.69 percent, with points increasing to 1.04 from 0.96 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. This was the lowest 30-year contract rate ever recorded in the survey. The effective rate also decreased from last week. The average contract interest rate for 15-year fixed-rate mortgages decreased to 4.05 percent from 4.12 percent, with points decreasing to 0.88 from 1.04 (including the origination fee) for 80 percent LTV loans. This was the lowest 15-year contract rate ever recorded in the survey. The effective rate also decreased from last week. The average contract interest rate for one-year ARMs decreased to 7.17 percent from 7.20 percent, with points increasing to 0.24 from 0.22 (including the origination fee) for 80 percent LTV loans. For more information, visit www.mortgagebankers.org.