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U.S. mortgage applications reach six-year high

January 14, 2015

Home Prices In March Hit Largest Gain In 7 YearsHome Prices In March Hit Largest Gain In 7 Years
A realtor sign is posted in front of a home for sale in San Francisco, Calif.Photograph by Justin Sullivan—Getty Images

Applications for U.S. home mortgages surged by the most in more than six years last week as 30-year mortgage rates dropped below 4 percent for the first time since May 2013 on the back of falling U.S. government bond yields, data from an industry group showed on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, jumped 49.1 percent in the week ended Jan. 9, its largest weekly percentage gain since late November 2008, in the middle of the U.S. financial crisis.

Refinancing activity was especially heavy. The MBA’s seasonally adjusted index of refinancing applications jumped 66.4 percent, the largest percentage gain in volume also since late November 2008, to its highest level since July 2013.

The gauge of loan requests for home purchases, a leading indicator of home sales, gained 23.6 percent to its highest level since September 2013.

Fixed 30-year mortgage rates averaged 3.89 percent in the week, down 12 basis points from 4.01 percent the week before. They hit their lowest level since May 2013.

“The US economy and job market continued to show signs of strength, but weakness abroad and tumbling oil prices have led to further declines in longer-term interest rates,” said Mike Fratantoni, MBA’s chief economist.

The yield on the U.S. 10-year note, the benchmark from which most mortgages are priced, on Tuesday marked its lowest end of day level at 1.905 percent since May 2013.

The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

Watch more about the increase in mortgage applications from Fortune’s video team: