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For the second straight week, mortgage applications rose significantly in response to the government’s efforts to stabilize housing and the economy.

The Mortgage Bankers Association’s week index reached 1159.4, an increase of 32.2 percent on a seasonally adjusted basis from 876.9 the previous week. On an unadjusted basis, the index rose 31.4 percent and was up 18 percent compared with the same week a year ago.

The refinance index increased 41.5 percent, while the purchase index rose 4.2 percent. Overall, the refinance share of mortgage activity hit 78.5 percent, up from 72.9 the previous week.

“Mortgage rates fell sharply to low levels not seen in six decades following the Federal Reserve’s announcement on the Treasury bond and mortgage-backed securities purchase programs. The drop offered a sizable refinance incentive for most homeowners sparking a pickup in refinance activity,” said Orawin Velz, Associate Vice President of Economic Forecasting.

Mortgage rates continued to decline:

  • 30-year fixed-rate mortgages decreased to 4.63 percent from 4.89 percent.
  • 15-year fixed-rate mortgages decreased to 4.48 percent from 4.52 percent.
  • 1-year ARMs increased to 6.22 percent.
Source: Mortgage Bankers Association