Overall applications increased nearly 9 percent from a week earlier, the Mortgage Bankers Association said Wednesday. But the growth in borrowing came from applications to refinance home loans and not to make new purchases.
Refinancings were up 13 percent, the highest level since May 2009. But they remain about half the level of early 2009, partly because many people who wanted and were able to refinance have already done so. Refinancing costs can total several thousand dollars.
New mortgages taken out to purchase homes fell 4 percent. They were 36 percent below last year's levels.
The average rate for a 30-year fixed loan, according to Freddie Mac. That was the lowest since the since the mortgage company began keeping records in 1971.
Refinances made up nearly 77 percent of all mortgage activity last week. That's up from 74 percent a week earlier.
Mortgage rates have fallen over the past two months. Investors, nervous about Europe's debt crisis and the global economy, have shifted money into safe Treasury bonds. That has caused Treasury yields to fall and mortgage rates track those yields.