Demand for mortgage applications jumped 8.6% in the past week as costs continue to come down, according to the latest survey from the Mortgage Bankers Association.
The average rate on a 30-year mortgage decreased to 3.20% from 3.27%.
Interest in refinancing also soared 10% from the previous week.
"Mortgage rates dropped to their lowest levels in around two months, prompting a small resurgence in refinance activity after six weeks of declines", said Joel Kan, MBA’s associate vice president of economic and industry forecasting. "Borrowers acted on the decrease in rates for most loan types, with both conventional and government refinance applications showing gains."
The lower mortgage rates also set buyers into motion as the seasonally adjusted Purchase Index increased 6% from one week earlier.
"The spring housing market also saw a boost from lower rates, with purchase applications – driven by a jump in conventional applications – increasing over 5 percent," said Kan. "MBA expects the purchase market to remain strong, with the recovering job market and supportive demographics fueling housing demand in the months ahead."
The survey covers over 75% of all U.S. retail residential mortgage applications. It has been conducted weekly since 1990.