Application volume increased 4.4% from one week earlier as rates hit their lowest level in seven months, according to the Mortgage Bankers Association.

The MBA's Weekly Mortgage Applications Survey for the week ending May 19 found that the refinance index increased 11% from the previous week.

Rates declined as investors fled the stock market on May 17, resulting in higher prices for the 10-year Treasury. Yields move in the opposite direction of bond prices.

The refinance share of mortgage activity increased to 43.9% of total applications from 41.1% the previous week.

The seasonally adjusted purchase index decreased 1% from one week earlier, while the unadjusted purchase index decreased 2% compared with the previous week and was 3% higher than the same week one year ago.

Adjustable-rate mortgage applications increased 1 basis point to 8.2%, while the Federal Housing Administration share increased 2 basis points to 10.8%.

The VA share decreased 2 basis points to 10.5% and the USDA share remained unchanged at 0.8%.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to 4.17% from 4.23%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100), the average contract rate decreased to 4.11% from 4.23%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.07% from 4.11%, while for 15-year fixed-rate mortgages, the average decreased to 3.45% from 3.51%.

The average contract interest rate for 5/1 ARMs decreased 3 basis points to 3.27%.

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