Mortgage Applications Surge On Low Rates

December 3, 2008 12:09 p.m. EST

Washington, DC (AHN) - Mortgage applications surged for the week ending Nov. 28 as rates for home loans made their biggest weekly drop on record due to the latest government lending and mortgage asset buying programs.

The Mortgage Bankers Association (MBA) reported Wednesday its weekly application index rose 112.1 percent to 857.7 on a seasonally adjusted basis. The index was 404.4 just last week.

"Many borrowers missed an opportunity to take advantage when rates dropped sharply for a brief period when the GSEs were placed under conservatorship," Orawin Velz, Associate Vice President of Economic Forecasting, said in a statement on the MBA website.

"When rates plummeted following the Fed's announcement that it would buy GSE debt and MBS, many of those on the sidelines decided to quickly jump in and take advantage of lower rates before they began to rebound," she added.

The MBA also reported a 203 percent increase in its refinance index from the previous week. Refinancing activity rose to 69.1 percent of total mortgage applications, up from 49.3 percent.

The average rate on a 30 year fixed mortgage was 5.47 percent for the week ending Nov. 28, down 0.52 percent from the previous week.

The MBA survey covers roughly 50 percent of retail residential mortgage applications and has been conducted since 1990.