Lower interest rates led to a spike in demand for mortgages.
The refinance area saw a huge increase in demand as the 15-year, fixed-rate mortgage fell to its lowest level in more than 30 years, according to the Mortgage Bankers Association's weekly survey.
Overall interest in obtaining a mortgage increased as application demand rose 5.7% from the week before.
"The 10-year Treasury yield fell last week, as investors grew concerned about increasing COVID-19 case counts and the downside risks to the current economic recovery," said Joel Kan, MBA’s associate vice president of economic and industry forecasting. "Refinance applications jumped, as the 30-year fixed mortgage rate declined to its lowest level since February 2021, and the 15-year rate fell to another record low dating back to 1990."
"Refinances for conventional loans increased over 11%. With over 95% of refinance applications for fixed rate mortgages, borrowers are looking to secure a lower rate for the life of their loan," added Kan.
The purchase index fell 2% for a second straight weekly decline as potential buyers continue to be put off by extremely high home prices and increased competition.
The average contract interest rate on a 30-year mortgage fell to 3.01% from 3.11%
The survey covers over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990.