WASHINGTON ( TheStreet) -- Mortgage applications increased 2.3% last week as mortgage rates fell slightly following seven weeks of gains. For the week ending Dec. 31, the volume of mortgage loan applications increased 2.3% after falling 3.9% in the prior week to the lowest level since December of 2009. Both weeks' results included adjustments to account for the Christmas and New Year's Day holidays.
The Mortgage Bankers Association reported data on Wednesday for the weeks ending Dec. 31 and Dec. 24. The MBA typically reports on mortgage activity each week but did not do so last week as it made adjustments for the Christmas holiday.
As mortgage activity fell then rose sequentially in the past two weeks, mortgage rates moved inversely, rising in the first reporting week and falling in the next. For the week ending Dec. 31, the average rate on a 30-year fixed mortgage fell to 4.82% after rising to 4.93% in the prior week. Refinancing activity increased 3.9% last week while home-purchase loan applications decreased 0.8%. In the week prior, refinancing activity decreased 7.2% while the purchase index increased 3.1%. A total of 71% of all loan applications in the week ending Dec. 31 were for refinancing existing mortgages, up from 70.3% in the prior week. Many Americans suffer from negative equity, where the amount they owe on their home is higher than the value of it, making them unqualified for refinancing. At year-end, home-purchase applications were 31% below their 2010 peak in April.
Rising mortgage rates, which some market watchers view as deterring home buying activity, are not likely to continue to rise, but are also unlikely to return to record lows seen in recent months, Paul Anastos, president of Mass.-based Mortgage Master, told TheStreet recently.