Activity in the mortgage markets picked up last week, according to the Mortgage Bankers Association.

The MBA's Market Composite index rose 5.8% on a seasonally adjusted basis from the previous week, with both the Refinance Index (+6%) and the Purchase Index (+5.5%) posting increases. It was the third straight week of increase in the Purchase Index, and the Conventional Purchase Index gained 5.4% to its highest level since May. On a non-seasonally adjusted basis, the conventional purchase index was at the highest level observed since early October.

On an unadjusted basis, the Index increased 5.4 percent compared with the previous week. The unadjusted Purchase Index increased 3.1% compared with the previous week and was 33.9% higher than the same week one year ago.

"Although mortgage rates were little changed following the Federal Reserve's decision to purchase $600 billion of Treasury bonds over the next eight months, mortgage applications increased last week," said Michael Fratantoni, MBA's vp of research and economics. "The increases in purchase applications we have seen over the past couple of weeks align with the better-than-expected news from October's employment report and other data indicating some improvement in the economy's growth prospects."

The four week moving average for the seasonally adjusted Market Index was down 1.9% but up 1% for the seasonally adjusted Purchase Index and down 2.6% for the Refinance Index.

The refinance share of mortgage activity increased to 81.7% of total applications from 81.3% the previous week. The adjustable-rate mortgage share of activity decreased a tenth of a point to 5.3%.

The average contract interest rate for 30-year fixed-rate mortgages remained unchanged at 4.28%, with points decreasing to 1.05 from 1.07 (including the origination fee) for 80% loan-to-value (LTV) ratio loans. The rate for 15-year fixed-rate loans also remained unchanged, at 3.64%, with points also remaining unchanged at 1.08.