Mortgage Applications Jump as Low Rates Spur Refinancing Demand
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, jumped 16.6 percent in the week ended Sept 28.
The index of refinancing applications surged 19.6 percent, hitting the highest level since April 2009.
The gauge of loan requests for home purchases - a leading indicator of home sales - also rose, though not as strongly, gaining 3.9 percent.
The stronger demand came as mortgage rates hit fresh lows in the wake of the Federal Reserve's latest aggressive program to boost the economy.
In a program known as quantitative easing, or QE3, the Fed said in September that it will buy $40 billion in mortgage-backed securities a month until the job market improves.
"Financial markets continue to adjust to QE3, as the ongoing presence of the Federal Reserve as a significant buyer of mortgage-backed securities applies downward pressure on rates," Mike Fratantoni, MBA's vice president of research and economics, said in a statement.
Fixed 30-year mortgage rates dropped 10 basis points to average 3.53 percent, down from 3.63 percent the week before.
The refinance share of total mortgage activity gained to 83 percent of applications from 81 percent the week before.
The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.
Fannie Mae Ranks Banks in 'Robo-Signing' Settlement as Top Servicers
Mortgage Fraud: California, New York Rank Highest, Report Says
Buying New Construction Homes, the Pros and Cons [Video]
More on AOL Real Estate:
Find out how to calculate mortgage payments.
Find homes for sale in your area.
Find foreclosures in your area.
See celebrity real estate.
Follow us on Twitter at @AOLRealEstate or connect with AOL Real Estate on Facebook.