NEW YORK, Jan 9 (Reuters) - Applications for home mortgages jumped by the most in more than three years after the interest rate on the benchmark 30-year fixed rate home loan dropped to its lowest since April, the Mortgage Bankers Association said on Wednesday.
The Washington-based group’s seasonally adjusted index on mortgage applications increased 23.5 percent to 362.7 in the week ended Jan. 4. It was the largest weekly increase since October 2015 and the index’s highest level since July.
The increase was led by the largest surge in mortgage refinancing applications in four years and comes as the interest rate on 30-year fixed rate mortgages fell to 4.74 percent last week from 4.84 percent the week before. That is the lowest that key borrowing rate has been since late April.
Applications for mortgages to purchase a home jumped 16.53 percent.
Thirty-year mortgage rates topped out at 5.17 percent in November as the U.S. Federal Reserve signaled its intent to press ahead with its three-year-old campaign of interest rate increases. But after the worst December for U.S. stocks since the Great Depression and other signs of tightening financial conditions, Fed officials recently signaled they would likely slow their pace or even take a pause.
U.S. Treasury bond yields have fallen since then, and mortgage rates, most sensitive to the 10-year U.S. Treasury yield, have followed suit. The 10-year yield was last trading just below 2.75 percent, roughly half a percentage point below its early-November high.
Reporting by Dan Burns; Editing by Steve Orlofsky