Mortgage refinance activity hits three-year high, as rates dwindle

U.S. mortgage refinance activity increased to its highest level since April 2009, as mortgage rates continue to trend downwards. According to weekly data from the Mortgage Bankers Association, overall mortgage activity rose 0.9 percent for the week ending July 20, 2012, thanks to a 2 percent gain in refinance applications. Mortgage applications for purchases actually fell 3 percent. Refinances now comprise 81 percent of all activity, up a percentage point from the previous week.

Interest rates for mortgages budged only slightly last week, and actually increased for borrowers seeking jumbo 30-year fixed-rate mortgages, whose rates grew one basis point to 3.99 percent. Interest rates for 30-year fixed-rate mortgages with conforming balances remained constant at 3.74 percent. Borrowing costs fell for Federal Housing Administration-backed 30-year fixed-rate loans and 15-year fixed-rate loans to record lows. The former sunk to 3.52 from 3.55, while the latter dropped to 3.07 percent from 3.12 percent. — Adam Fusfeld