Mortgage applications increased 7.1 percent from one week earlier, according to data from the Mortgage Bankers Association's Weekly Mortgage Applications Survey for the week ending July 29, 2011. The Market Composite Index, a measure of mortgage loan application volume, increased 7.1 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased seven percent compared with the previous week. The Refinance Index increased 7.8 percent from the previous week. The seasonally adjusted Purchase Index increased 5.1 percent from one week earlier. The unadjusted Purchase Index increased 5.2 percent compared with the previous week and was 5.9 percent higher than the same week one year ago. "Treasury rates plummeted more than 20 basis points last week as all eyes were focused on the debt ceiling negotiations in Washington, and economic data depicted much slower than anticipated economic growth," said Michael Fratantoni, VP of research and economics for the Mortgage Bankers Association (MBA). "Mortgage rates fell, with the rate on 15-year mortgages reaching a new low in our survey. Refinance application volume increased, but even though 30-year mortgage rates are back below 4.5 percent, the refinance index is still almost 30 percent below last year's level. Factors such as negative equity and a weak job market continue to constrain borrowers. Purchase activity increased off of a low base, returning to levels of one month ago, but remains weak by historical standards." The four week moving average for the seasonally adjusted Market Index is up 2.8 percent. The four week moving average is down 0.4 percent for the seasonally adjusted Purchase Index, while this average is up 4.2 percent for the Refinance Index. The refinance share of mortgage activity increased to 70.1 percent of total applications from 69.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.6 percent from 6.1 percent of total applications from the previous week. The average contract interest rate for 30-year fixed-rate mortgages decreased to 4.45 percent from 4.57 percent, with points decreasing to 0.78 from 1.14 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The effective rate also decreased from last week. Both the contract rate and effective rate for 30-year fixed rate mortgages are at their lowest levels since Nov. 5, 2010. The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.52 percent from 3.67 percent, with points decreasing to 1.02 from 1.08 (including the origination fee) for 80 percent LTV loans. The effective rate also decreased from last week. Both the contract rate and the effective rate for 15-year fixed rate mortgages are the lowest since the survey began in 1990.