NEW YORK - Mortgage applications rose 3.8% in the week ended May 18, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.

The refinance index increased 5.6%, its third straight increase. The seasonally adjusted purchase index fell 3.0%.

"Continuing negative developments in the sovereign debt crisis in Europe, particularly in Greece and Spain, as well as the recent French elections, which have shifted political power in a manner that will likely show less support for European austerity, helped push the US 10 Year Treasury yield below 1.7% last week," said Michael Fratantoni, MBA's Vice President of Research and Economics. "Mortgage rates again dipped to new record lows in the survey, which spurred more borrowers back into the refinance market. As a result, applications for refinance loans have increased for the third straight week and are at the highest level since February of this year.  The HARP share of refinance applications was essentially unchanged over the week at 28%, so it was not the primary driver of the increase over the previous week."

The four-week moving average for the seasonally adjusted market index grew 3.72%. The four-week moving average rose 0.17 percent for the seasonally adjusted purchase index, while this average is up 4.83% for the refinance index.

Refinances accounted for 76.6% of total applications, up from 74.9%, while adjustable-rate mortgages were 5.0% of the market, down from 5.4% the previous week.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 3.93%, the lowest rate in the history of the survey, from 3.96%.

The average contract interest rate for 15-year fixed-rate mortgages remained unchanged at 3.26%.

Subscribe Now

Independent and authoritative analysis and perspective for the bond buying industry.

14-Day Free Trial

No credit card required. Complete access to articles, breaking news and industry data.