Following two consecutive weeks of decreased activity, mortgage application volume increased 1.3 percent for the week ending March 26, 2010, the Mortgage Bankers Association (MBA) reported Wednesday.

The jump in application volume was the result of an overwhelming increase in purchase activity. According to MBA’s Weekly Mortgage Applications Survey, the Purchase Index soared 6.8 percent from one week earlier, which is the highest the index has been since the week ending October 30, 2009.

“Purchase applications have increased over the past month and are now at their highest level since last October when many homebuyers were rushing to get

loans closed before the expected expiration of the homebuyer tax credit,” said Michael Fratantoni, MBA’s VP of research and economics. “We may be seeing a similar pattern now, as the extended version of the tax credit ends next month.”

Conventional and government purchase indexes saw increases in MBA’s survey, and both the government purchase index and the government share of purchase applications were at their highest levels since October 2009. Government purchase applications accounted for 47.2 percent of total purchase applications.

Although purchase activity surged, the same couldn’t be said for refinance activity. The Refinance Index decreased 1.3 percent from the previous week, and the refinance share of mortgage activity decreased to 63.2 percent of total applications. MBA said this is the lowest refinance share recorded in the survey since the week ending October 23, 2009.

The overall increase in mortgage applications was surprisingly accompanied by a week-to-week jump in interest rates.

MBA said the average contract interest rate for 30-year fixed-rate mortgages inched up to 5.04 percent from 5.01 percent, and the average rate for 15-year fixed-rate mortgages nudged up to 4.34 percent from 4.33 percent.