Mortgage applications soar 48% - rates fall

Spike in refinancing following Fed moves leads to nearly 50% jump in Mortgage Bankers' index; home purchases also up.

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NEW YORK (CNNMoney.com) -- Near record low mortgage rates sent mortgage applications shooting higher last week, especially for refinances, according to an industry report.

The Mortgage Bankers Association reported that its overall Market Composite Index, a measure of mortgage loan application volume, shot up 48% on a seasonally adjusted basis for the week ending Dec. 19.

That was driven by a 62.6% leap in the group's Refinance Index. But the Conventional Purchase Index also increased 17.7%. The only component of the overall index to fall was the Government Purchase Index, which largely tracks FHA loans. It slipped 3.4%

The Federal Reserve announced last week that it had cut its benchmark fed funds rate to nearly 0%, and it also announced it would buy more mortgage-backed securities issued by Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500), moves designed to jumpstart the faltering U.S. economy partly by taking mortgage rates lower.

And the moves by the central bank helped lower mortgage rates. Freddie Mac's survey of mortgage rates last week showed more than a quarter-percentage-point drop to what was then the lowest level in the 37-year history of the survey. The 30-year fixed rate mortgage fell last week to 5.19% from 5.47% the week before.

Freddie's latest mortgage survey, released Wednesday, showed that the average 30-year fixed rate fell for the eighth straight week to yet a new record low of 5.14%, although the adjustable rate mortgages edged up by 0.01 percentage points from last week's level.

But the jump in mortgage applications and the low rates are a rare bit of good news for the battered housing and home building markets. The report comes a day after the National Association of Realtors reported the number of existing homes sold during November plummeted 8.6% as prices plunged by record amounts. New home sales were also lower, according to a government report. And housing starts and building permits now stand at record low levels.

All news is bad news in real estate right now. Have you recently bought a house anyway? Send your story and photos to realstories@cnnmoney.com and you could be featured in an upcoming article.  To top of page

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