Another major drop in mortgage rates caused a massive jump in borrowers applying to refinance their home loans.

The surge sent total mortgage application volume up 55.4% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Volume was 192% higher annually. 

Refinance applications rose a whopping 79% for the week and were 479% higher than a year ago. That was the highest level of refinancing since April 2009. Falling mortgage rates over the past several weeks generated an unexpected refinance boom, but last week, when rates fell even more sharply due to deep market concerns over the coronavirus, the news clearly resonated with borrowers. The refinance share rose to 76.5% of total applications from 66.2% the previous week. 

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) matched the MBA’s December 2012 survey low of 3.47%, from 3.57%, with points increasing to 0.27 from 0.26 (including origination fee) for loans with a 20% down payment. That rate was 117 basis points lower than a year ago.

Other reads on mortgage rates, like Freddie Mac’s weekly index, had the average rate hitting a record low.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) decreased to the lowest level since the series was added in 2011, 3.58%, from 3.63% with points decreasing to 0.20 from 0.21 (including the origination fee) for loans with 20% down.

“Taking into the account the current economic situation and how much rates have fallen, MBA is nearly doubling its 2020 refinance originations forecast to $1.2 trillion, a 37% increase from 2019 and the strongest refinance volume since 2012,” said Joel Kan, an MBA economist. “As lenders handle the wave in applications and manage capacity, mortgage rates will likely stabilize but remain low for now. This in turn will support borrowers looking to refinance or purchase a home this spring.”

Mortgage applications to purchase a home increased a much milder 6% for the week and were 12% higher annually. Potential homebuyers are clearly weighing these very low interest rates against their concerns over the coronavirus’ effect on the overall economy and employment. They are also facing a record low supply of homes for sale. 

Mortgage rates have come off their record lows and took a sizable move higher on Tuesday, as news of potential government stimulus to combat the financial effects of COVID-19 circulated.

PUBLISHED WED, MAR 11 20207:00 AM EDTUPDATED WED, MAR 11 20207:34 AM EDT   Diana Olick