Mortgage application volume increased 7.5% for the week ended Jan. 25, 2008, the Mortgage Bankers Association's announced Wednesday.
The MBA's application index rose to 1,054.9 from 981.5 the previous week. The index peaked at 1,856.7 during the week ending May 30, 2003, at the height of the housing boom.
Refinance volume pushed the index higher. Refinance application volume increased 22.1%, while purchase volume tumbled 17.7%. Refinance applications accounted for 73% of total applications.
An index value of 100 is equal to the application volume on March 16, 1990, the first week the MBA tracked application volume. A reading of 1,054.9 means mortgage application activity is 10.549 times higher than it was when the MBA began tracking the data.
The survey provides a snapshot of mortgage lending activity among mortgage bankers, commercial banks and thrifts. It covers about 50% of all residential retail mortgage originations each week.
Application volume rose despite a slight increase in interest rates. The average rate for traditional, 30-year fixed-rate mortgages increased to 5.6% from 5.49%. The average rate for 15-year fixed-rate mortgages rose to 5.04% from 4.95%. Average rates for one-year adjustable rate mortgages increased to 5.7% from 5.51%.
Economic Analysis: Despite the index's recent rise, the cogent part of the report remains the index's drop from its peak in May 2003. In hindsight, it's now clear the U.S. housing sector expanded at unsustainable rates, and experienced an asset appreciation bubble, not an 'extended, sustainable balloon,' as some in the mortgage industry had claimed it was in 2003-2005.
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