Weekly mortgage application volume soared 112.1 percent on a seasonally-adjusted basis, following the Fed’s announcement that it would begin buying agency MBS, according to data released Wednesday morning by the Mortgage Bankers Association. The group’s composite index of purchase and refinancing application activity rose sharply to 857.7 for the week ending Nov. 28, a shortened week due to the Thanksgiving holiday. The rise wasn’t enough to offset a yearly decline in application activity, however, with the MBA report that composite applications remained 21.9 percent below year-ago levels — meaning applications remain weak. “Many borrowers missed an opportunity to take advantage when rates dropped sharply for a brief period when the GSEs were placed under conservatorship,” said Orawin Velz, the MBA’s associate vice president of economic forecasting. “When rates plummeted following the Fed’s announcement that it would buy GSE debt and MBS, many of those on the sidelines decided to quickly jump in and take advantage of lower rates before they began to rebound.” The Federal Reserve announced on Nov. 25 it would begin buying housing-related debt and mortgage-backed securities from the Federal Home Loan Banks and government-sponsored entities Fannie Mae (FNM), Freddie Mac (FRE) and Ginnie Mae. The announcement triggered a sharp drop in interest rates, although the drop was short-lived. Analysts at Barclays Capital noted in a research note Wednesday that the group’s internal mortgage rate derived from TBA trading activity in the secondary mortgage market fell 57 basis points the day of the Fed’s announcement. The MBA’s own rate data reflected a similar drop in rates, reporting Wednesday that the average interest rate for 30-year fixed-rate mortgages had decreased to 5.47 percent, from 5.99 percent the previous week. Rates have since increased from that level, for various reasons. While purchases showed only a little pop, rising 38 percent, refinance applications soared on the Fed’s announcement, more than doubling according to the MBA data. Barclays Capital analysts, however, cautioned that the application data was likely to be overstated due to an adjustment for the Thanksgiving holiday. It was a sentiment shared by Paul Descloux, publisher of the MAX application index, a separate index of mortgage application activity that corrects for multiple applications per household. The MAX reported a 16.8 percent rise for the same period covered by the MBA index data, but unadjusted for the holiday, the index would have posted a 30.1 percent decline. Descloux attributed the jump to an REO-heavy market enjoying slightly lower mortgage rates on the heels of the Fed’s announcement for a short period of time. “There is no evidence of a significant pop in activity last week following the Fed’s buying MBS commensurate with the magnitude reported in the press. Activity to be sure is still way, way down,” he wrote in a weekly report. “This upcoming week will need to be followed for confirmation of this increased pace if indeed the holiday adjustment factor is overstating activity.” For more information, visit http://www.mortgagemaxx.us and http://www.mortgagebankers.org. Write to Diana Golobay at diana.golobay@housingwire.com. Disclosure: The author held no relevant investment positions when this story was published. Indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.