There was nothing but good news in the Weekly Mortgage Applications Survey this morning. Average rates for a 30-year mortgage fell 23 basis points to a 6-week low at 5.15%, helping demand for purchases, refinancing, and new mortgages to all advance.

Demand for refinance-related loans climbed 6.9% in the week ending August 14, nearly erasing the 7.2% decline it had seen in the previous week. The fresh activity helped the Market Composite Index ― which tracks the volume of mortgage applications ― to advance 5.6% in the week, an encouraging contrast when compared to the 4-week average of -0.1%.

In addition, the Purchase Index continued to rise for the third consecutive week, jumping 3.9% to put the 4-week average at +1.5%. Since late February purchases have risen more than 10%.

“The large swings in mortgage rates over the past month have resulted in see-saw like activity in the Refinance Index,” the report said. “By contrast, the purchase activity has not been deterred by interest rate volatility, and has continued to trend gradually upward.”

“The market is finally turning the corner after a severe three-year slump,” said BMO analyst Sal Guatieri before the release. He and others are expecting the Existing Home Sales Index to report its fourth consecutive monthly increase on Friday, which would be the longest string of advanced in five years.

Mortgage rates vary across the country but the state average is below 5.5% ― an historically low rate ― in all 50 states. According to a report from Zillow.com published yesterday, lenders in Washington and California offer the lowest rates with an average of 5.25%, while rates in Illinois are currently the highest at 5.44%.

Brad Geisen, president of Foreclosure.com, said it is prices rather than mortgage rates that are causing the increase in activity. "Probably the biggest driving factor for home purchasing right now is price," he said. "During the housing boom, a lot of first-time home buyers were squeezed out of the market, but now property values have come down enough where they can afford it."

David Adamo, CEO of Connecticut-based Luxury Mortgage, also said recently that confidence was the driver of new sales, not interest rates. He added: "Once the general psychology of the market place returns to normal we will see the purchase activity substantially improve which will restore our housing market and overall economy."