By Mike Colpitts
Ushered in by near record low mortgage rates, evidence of a pick up in home buying is beginning to develop as the annual spring home buying season turns into high gear, with 
an increase in home purchase applications for mortgages, according to the Mortgage Bankers Association.
The announcement is good news for the beleaguered housing market struggling to rebound from a downturn. Mortgage applications for purchases showed a seasonally adjusted 2.9% increase last week from one week earlier and the first hike in two months.
But refinances declined seven-tenths of one-percent, the banker’s survey indicated. Despite a new program eliminating the loan-to-value ratios for some underwater homeowners, refinancing has been slowed for more than two weeks.
The pick up in purchase applications is attributed to near record low mortgage rates being offered to purchasers, and home prices that are at their lowest levels in years. The average fully executed contract interest rate for a 30-year fixed-rate mortgage with conforming loan balances ($417,500 or less) was 4.05% for the week, a single basis point increase from the prior week.
The hike in purchases comes just in time for the spring home buying season, ushered in by unseasonably warmer weather through most of the U.S. The government share of purchase applications for mortgages remained steady for the week at 37%, the lowest FHA loan applications have been since 2009.
An increase in premiums paid in advance for FHA loans that went into effect at the beginning of April has slowed the sector.
The average contract interest rate on a 15-year fixed-rate loan fell to 3.31%, the lowest in the history of the survey, with points at 0.41 (including the origination fee) for 80% loans. The effective rate decreased from last week. The mortgage rate for 5/1 adjustable rate mortgages rose to 2.87%, a four basis point increase.