Mortgage application activity increased 4% in the week ending April 29 as refinancing activity picked up in response to lower mortgage rates. 

The Mortgage Bankers Association (MBA) reported the Refinance Index jumped 6% to ~2082, which is its highest level in four weeks. The Purchase Index also eked out a small 0.3% increase to ~183 with borrowers responding to historically attractive affordability levels.

Mortgage rates declined for the third straight week, according to the report, with 30-year fixed rates down four basis points to 4.76% with points also falling to 0.76 from 1.0 for 80% LTV loans.  This is the lowest the 30-year rate has been since early December 2010.

As a percent of total applications, refinance share increased to 62.7% from 61.7%. ARM share was also higher to 6.7% from 6.5% as ARM rates are near or at their lowest levels for 2011.

For the month of April, the Refinance Index average was down 16.5% from March's average, as 30-year fixed mortgage rates held unchanged at a 4.84% average. 

The May and June prepayment reports  which will be released in June and July, respectively where April's refinance activity will have an impact, conventional speeds are projected to increase just 2% to 3% from April. This is mainly a result of a higher number of collection days at 21 and 22 versus 20 in April.

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