Despite a continued drop in purchase applications, total mortgage loan application volume jumped 8.8 percent for

the week ending June 25, 2010, due to a surge in refinance applications, the Mortgage Bankers Association (MBA) reported Wednesday.

According to MBA’s Weekly Mortgage Applications Survey, the purchase index fell an additional 3.3 percent from the week prior. Michael Fratantoni, MBA’s VP of research and economics, said this was the seventh time in the last eight weeks that applications to purchase a home

have declined. Consequently, the index remains near 13-year lows, he said.

The drop in purchase applications was overshadowed by an upsurge in refinance applications, though.

MBA said the refinance index soared 12.6 percent from the previous week, hitting the highest level observed in the survey since the week ending May 22, 2009. As a result, the refinance share of mortgage activity edged up to 76.8 percent of total applications from 73.8 percent one week earlier, marking the highest refinance share observed in the survey since April 2009.

“Amid continuing financial market volatility, mortgage rates dropped again last week, with rates on 15-year loans reaching a record low for the MBA survey,” Fratantoni said. “Refinance applications jumped in response, but remain at about half the level seen in the spring of 2009.”

The week-to-week drop in mortgage rates was undoubtedly a driving factor behind the surge in refinance applications. According to MBA, the average rate for 30-year fixed-rate mortgages fell to 4.67 percent from 4.75 percent, and the average for 15-year fixed-rate mortgages dropped down to 4.06 percent from 4.19 percent.