Industry data released on Wednesday showed that mortgage application volume rose over 32 percent last week, as low mortgage rates on the heels of the Fed's decision to buy Treasury securities encouraged both the purchase and refinancing of mortgages. Rates fell to 6-year lows, spurring a 41.5 percent jump in refinancing activity.

The Mortgage Bankers Association revealed that its market index of mortgage application volume jumped 32.2 percent on a seasonally adjusted basis for the week of March 20th, following a 21 percent jump last week. The Market Composite Index was1159.4 compared to 876.9 in the previous week.

On an unadjusted basis, the index increased 31.4 percent and 18 percent on a year-over-year basis.

Mortgage rates fell sharply to low levels not seen in six decades following the Federal Reserve's announcement on the Treasury bond and mortgage-backed securities purchase programs. The drop offered a sizable refinance incentive for most homeowners sparking a pickup in refinance activity, said Orawin Velz, Associate Vice President of Economic Forecasting.

The Refinance Index jumped 41.5 percent following a 29.6 percent increase last week. For the week of March 20th, the index rose to 6363.2 from 4497.6 in the previous week.

Accordingly, 78.5 percent of mortgage activity took place through refinancing last week, up from 72.9 percent in the previous week, reflecting the drop in interest rates. The four-week moving average for the Refinance Index represents a 18.7 percent increase.

The conventional and government purchase indices both increased, with the conventional purchase index ticking up 3.9 percent and the government purchase index, largely made up of FHA loans, edging rising 4.6 percent.

The adjustable rate mortgage share of activity ticked down to 1.4 percent from 2.0 percent of total applications in the previous week.

Interest rates were mixed across the board, with 30-year fixed-rate mortgages sliding further below 5 percent to 4.63 percent from 4.89 percent last week. The rates for 15-year fixed-rate edged down slightly to 4.48 percent from 4.52 percent last week. One-year ARMs bucked the trend by increasing, with their contrast interest rates hitting 6.22 percent from 6.20 percent last week.

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