A jump in mortgage rates last week led to a drop in application activity, according to data released Wednesday by the Mortgage Bankers Association. A composite index of mortgage loan application volume maintained by the mortgage group registered 671.7 for the week ending March 7, a decrease of 1.9 percent on a seasonally-adjusted basis from 684.9 one week earlier. The application index is calibrated to March 16, 1990; a reading of 671.7 means that application activity was roughly 6.7 times greater than when the index was first established. The overall application index in recent months has been driven primarily by swings in refinancing activity, which headed downward last week as rates jumped significantly. Refinancing applications fell 4.7 percent, the MBA said, while purchase applications actually increased 1.6 percent. FHA and VA applications soared, jumping 6 percent, indicating that higher FHA loan limits may have begin to affect application volume for this segment of the mortgage market. While many rate surveys found rates dropping last week, Housing Wire was among a few that covered a large jump in rates tied to turmoil in the secondary market for mortgages. Formal rates studies by both Freddie Mac and Bankrate.com will be available tomorrow, but the banker’s group said that its survey found 30-year fixed-rate mortgages at an average of 6.37 percent last week, up 39 basis points from one week earlier. For more information, visit http://www.mortgagebankers.org.

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