More Americans refinanced their homes at the end of January, with mortgage applications increasing by 2.2% from the previous week.
The rise was driven by a 12% increase in refinance applications from the previous week, as mortgage rates declined according to a weekly survey by Mortgage Bankers Association.
The average 30-year fixed mortgage rate dropped to 6.97%, at the end of January, its lowest in six weeks.
"Mortgage applications responded to these lower rates and were up for the week overall," MBA's vice president Joel Kan said.
This led homeowners to secure a lower rate on their mortgage, reducing their monthly payments and the overall loan costs.
The refinance share of mortgage activity increased to 39% of total applications from 37.1% the previous week.
However, applications to buy homes decreased by 4% on a seasonally adjusted basis.
The average loan amount for purchase applications grew to $447,300, the highest since October of last year.
Government-backed loans saw mixed results, with FHA applications decreasing and VA applications slightly rising.
The National Association of Realtors forecasted mortgage rates to stabilize at 6% sometime this year, establishing a "new normal."
