Bloomberg BusinessWeek reported yesterday that mortgage applications have risen for the second week in a row. This increase could be attributed to gains in refinancing, cushioning a drop in purchases after the federal tax credit expired on April 30.

According to the article, the Mortgage Bankers Association’s (MBA) index increased 0.9 percent in the week ending May 28. The group’s refinancing measure increased 2.4 percent, the highest in seven months, while its gauge of purchases dropped to the lowest level since April 1997, at 4.1 percent.

Purchase intentions have declined since April 30, which was the deadline for a tax credit worth as much as $8,000. Refinancing has become more popular as homeowners try to reduce their monthly payments.

Applicants seeking to refinance a loan rose to 73.8 percent last week, the highest level of the year, from 72.2 percent the prior week.

The average rate on a 30-year fixed loan increased this week to 4.80 percent last week to 4.83 percent. Rates reached a record low of 4.61 percent in March 2009 after the Federal Reserve expanded a mortgage-purchasing plan aimed at reducing lending rates. That program ended in March.

Despite these positive numbers from the MBA, it remains to be seen if this rally can be sustained. The current roadblocks to the rally include the drop-off in home purchases and the unemployment rate, which is hovering around double digits.