NEW YORK (Reuters) - Applications for U.S. home mortgages surged last week, driven by increased demand for refinancing as interest rates hit fresh lows, an industry group said on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, jumped 9.2 percent in the week ended May 11.
The MBA’s seasonally adjusted index of refinancing applications spiked up 13.0 percent. But the gauge of loan requests for home purchases slipped 2.4 percent.
“A flare-up of the sovereign debt troubles in Europe once again led investors to flee to the safety of U.S. Treasury securities last week,” Michael Fratantoni, THE MBA’s vice president of research and economics, said in a statement.
“As a result, mortgage rates have reached new lows in our survey, and refinancing application volumes picked up substantially as a result.”
Fixed 30-year mortgage rates averaged 3.96 percent in the week, down 5 basis points from 4.01 percent.
The refinance share of total mortgage activity rose to 74.9 percent of applications from 72.1 percent.
The survey covers over 75 percent of U.S. retail residential mortgage applications, according to THE MBA.
Reporting By Leah Schnurr; Editing by Leslie Adler