Weekly mortgage refinance demand increases by 20%, fueling a surge in the mortgage refinance boom.

• The number of applications to refinance a home loan increased by 20% in the most recent week relative to the prior week.
• The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 6.13% from 6.15%.
• The refinance share of applications rose to 55.7%.
• The number of mortgage applications to purchase a home increased by 1% during the week, compared to the previous week, and was 2% higher than the same week a year ago.

Homeowners are rushing to take advantage of potential savings due to a steady decline in mortgage rates to two-year lows.

The number of applications to refinance a home loan increased by 20% last week compared to the previous week, according to the Mortgage Bankers Association's seasonally adjusted index. This was a 175% increase compared to the same week one year ago.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 6.13% from 6.15%, with points increasing to 0.57 from 0.56 (including the origination fee) for loans with a 20% down payment. This rate was 128 basis points higher the same week one year ago, or 7.41%.

"The MBA's vice president and deputy chief economist, Joel Kan, announced that the 30-year fixed rate decreased for the eighth consecutive week to 6.13%, while the FHA rate decreased to 5.99%, breaking the psychologically important 6% level. As a result of the lower rates, week-over-week gains for both conventional and government refinance applications increased sharply."

The percentage of refinance mortgage applications increased to 55.7%, marking a significant increase from the previous year. However, despite this increase, the level of refinance activity remains relatively low compared to previous refi waves, according to Kan.

Despite the seasonal slowdown in homebuying, mortgage applications to purchase a home increased by 1% for the week and were 2% higher than the same week last year. However, buyers are still grappling with high home prices and a limited supply of houses for sale.

The overall average loan size reached its highest in the survey's history at $413,100 due to higher average loan sizes for both purchase and refinance applications, according to Kan.

This week, mortgage rates are expected to remain stable, with any changes occurring after more critical economic information becomes available later in the week and in early October.