Refinancing activity rose for the third straight week, according to the Mortgage Bankers Association (MBA).
For the week ending Jan. 14, the Refinance Index increased 7.7% to ~2390, its highest level since mid-December.
As a percent of total application activity, refinancing share rose to 73% from 72.1%.
The gain came despite an increase in the effective mortgage rate. While the average contract interest rate for 30-year fixed rate mortgages slipped one basis point to 4.77%, points increased to 1.2% from 0.91% for 80% LTV loans.
Since the week ending Dec. 24, the Refinance Index has recovered 17%. However, activity remains down sharply from mid-fall's levels, which were in the 4000 area.
At this time, conventional speeds are projected to decline 20% in February (reported in March) and increase slightly in March. This was boosted by an increase in the number of collection days to 23 from 19 in February.
The MBA also reported that the Purchase Index declined — for the third straight week, by 1.9% to 189.
"Refinance applications have picked up, as borrowers take advantage of lower rates, but purchase applications remain quite low, indicating that home sales are unlikely to pick up any time soon," noted MBA Vice President of Research and Economics Michael Fratantoni.