updated 12/17/2008 1:37:37 PM ET 2008-12-17T18:37:37

Mortgage application volume jumped last week, fueled by borrowers seizing on lower rates to refinance home loans, the Mortgage Bankers Association said Wednesday.

The trade group's seasonally adjusted application index rose 2.9 percent to 841.4 in the week ended Dec 12. The index stood at a revised 817.7 a week earlier.

Interest rates have been declining in recent weeks and are expected to fall further following the Federal Reserve's move on Tuesday to cut its target interest rate to nearly zero.

Refinance volume rose 6.5 percent last week, while purchase volume fell 4.5 percent.

The index peaked at 1,856.7 during the week ending May 30, 2003, at the height of the housing boom. This year, it hit a high of 1,086.6 in the week ended Feb. 2.

An index value of 100 is equal to the application volume on March 16, 1990, the first week the MBA tracked application volume. The survey provides a snapshot of mortgage lending activity involving mortgage bankers, commercial banks and thrifts. It covers about 50 percent of all residential retail mortgage originations each week.

The average rate for traditional, 30-year fixed-rate mortgages decreased to 5.18 percent from 5.44 percent, according to the MBA report. The average rate for 15-year fixed-rate mortgages fell to 4.93 percent from 5.08 percent.

The average rate for one-year adjustable-rate mortgages fell to 6.63 percent from 6.76 percent.

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Data: Latest rates in the US

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Home equity type Today +/- Chart
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