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Loan Demand on the Rise

forsaleMortgage applications rose 5 percent last week as interest rates dropped to their lowest levels since January, the Mortgage Bankers Association reports in its weekly mortgage market survey. MBA's index measures loan demand for refinancings and purchases.

Refinancings — which make up the biggest bulk of applications in the index — rose 6 percent last week. Meanwhile, applications for home purchases, viewed as a leading gauge for future home sales, dropped 1 percent last week compared to the prior week, MBA reported Wednesday.

"Although total purchase application volume fell last week, there was a significant divergence between the conventional and government markets," says Mike Fratantoni, MBA's vice president of research and economics.

Fratantoni said that following the Federal Housing Administration's April 1 increase of mortgage insurance premiums, government purchase applications dropped by nearly 14 percent to the lowest point since February.

On the other hand, applications for conventional purchase loans increased by more than 5 percent, reaching their highest level since October 2009.

MBA reported the average 30-year fixed-rate mortgage last week dropped to 3.68 percent from 3.76 percent.