The total number of mortgage applications rose 1.1%% last week following 3%+ declines during the prior two weeks, according to the Mortgage Bankers Association.

Purchase applications rose 3.8% and reversed nearly all of the prior weeks decline.

During the last ten years there has been a 58% correlation between the y/y change in purchase applications and the change in new plus existing single family home sales.

Applications to refinance fell 3.0% for the third consecutive weekly decline.

The effective interest rate on a conventional 30-year mortgage rose to 6.96% from 6.85% the prior week. Rates averaged 6.84% last month, up from 6.28% in December. The peak for 30 year financing was 7.08% late in June. Rates for 15-year financing also fell to 6.66% last week. Interest rates on 15 and 30 year mortgages are closely correlated (>90%) with the rate on 10 year Treasury securities.

During the last ten years there has been a (negative) 79% correlation between the level of applications for purchase and the effective interest rate on a 30-year mortgage.

The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey covers roughly 50% of all U.S. residential mortgage applications processed each week by mortgage banks, commercial banks and thrifts. Visit the Mortgage Bankers Association site here.

Yesterday’s Remarks by Chairman Ben S. Bernanke can be found here.