July 14 (UPI) -- An unexpected decline in mortgage rates has led to a sharp increase in refinancing demand in the United States, an industry report said Wednesday.
The Mortgage Bankers Association said in its weekly assessment that refinance applications nationwide rose by 20% last week.
The surge among homeowners to refinance followed the average rate for 30-year mortgages falling from 3.15% to 3.09%.
Joel Kan, MBA associate vice president of economic and industry forecasting, said the rate fell to its lowest mark since February.
The refinance applications were "aided by a 23% increase in conventional refinance applications," Kan said in a statement. "Also, there may have been a delayed spillover of applications from the previous week, when rates also decreased, but there was not much of response in terms of refinancing applications."
Applications to buy also increased for the week, but Kan said the average national loan size decreased to the lowest mark since January.
"We continue to see ebbs and flows as housing demand remains strong but for-sale inventory remains low," he said. "However, lower rates may be helping some home buyers close on their purchases, especially first-time home buyers.
Real estate brokerage firm Redfin reported on Monday that home listings are up 4% compared to a year ago.