Mortgage applications increased 15.5 percent over last week, according to data from the Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ending July 15, 2011. The Market Composite Index, a measure of mortgage loan application volume, increased 15.5 percent on a seasonally adjusted basis from one week earlier, which included the July 4th holiday. On an unadjusted basis, the Index increased 43.9 percent compared with the previous week. The Refinance Index increased 23.1 percent from the previous week. The seasonally adjusted Purchase Index decreased 0.1 percent from one week earlier. The unadjusted Purchase Index increased 25.1 percent compared with the previous week and was 8.3 percent higher than the same week one year ago. The four week moving average for the seasonally adjusted Market Index is up 0.3 percent. The four week moving average is down 0.3 percent for the seasonally adjusted Purchase Index, while this average is up 0.5 percent for the Refinance Index. The refinance share of mortgage activity increased to 70.1 percent of total applications from 65.6 percent the previous week, reaching its highest level since January 21, 2011. The adjustable-rate mortgage (ARM) share of activity increased to 5.8 percent from 5.5 percent of total applications from the previous week. "Ongoing turmoil in the financial markets primarily due to the sovereign debt crisis in Europe has brought mortgage rates back to their lowest levels of the year," said Michael Fratantoni, VP of research and economics for the Mortgage Bankers Association (MBA). "Refinance applications have surged in response and the refinance index is at its second highest level of the year. One factor that may be contributing to this increase is that borrowers potentially impacted by impending decreases in the conforming loan limit may be opting to lock in fixed-rate financing now." The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.54 percent from 4.55 percent, with points decreasing to 0.98 from 0.99 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate also decreased from last week. The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.66 percent from 3.68 percent, with points decreasing to 0.97 from 1.10 (including the origination fee) for 80 percent LTV loans. The effective rate also decreased from last week and is now at the lowest level since Oct. 8, 2010.