Mortgage interest rates have been a bit volatile lately. They have been rising and falling from week to week, changing as the outlook does. This week, though, there are lower mortgage interest rates, and that is leading to an upsurge in mortgage applications. On top the lower mortgage rates, government programs are helping. On the refinancing front, Making Home Affordable is getting more attention, and, of course, there is the first time home buyer tax credit. Mortgage News Daily offers this look at last week’s mortgage applications:

The Mortgage Bankers Association said the average mortgage rate fell to 4.97% in the week ending September 18. That, in combination with the $8,000 tax credit for first-time home purchasers expiring at the end of November, helped the mortgage loan application index expand by 12.8% in the week.

Clearly, even with home prices heading a bit higher, there is still great demand for buying. This is not much of a surprise, since even with rising prices, there are still great deals to be found, since home values are near the bottom during this recession. People are finally seeing that the recession is coming to an end, and that government programs won’t last forever. As a result, they are moving on opportunities to become home buyers.