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The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting an increase of 1.6% in the group’s seasonally adjusted composite index for the week ending December 7. Mortgage interest rates dropped on all five types of loans the MBA tracks.

On an unadjusted basis, the MBA’s composite index fell by 1% week over week. The seasonally adjusted purchase index increased by 3% compared with the week ended November 30. The unadjusted purchase index dropped by 2% for the week and was 4% higher year over year.

Mortgage loan rates for the top-tier dropped last week from a prior week’s ending value of 4.86% to 4.71% for a 30-year fixed-rate loan, according to Mortgage News Daily. As of Tuesday night, top-tier borrowers were receiving the same rate. The yield on a 10-year U.S. Treasury note also dipped week over week from 2.92% to 2.88% last night. A year ago the 10-year note yielded 2.39%.

Joel Kan, the MBA’s Associate Vice President of Economic and Industry Forecasting, commented:

Mortgage rates fell across the board last week, driven by a similar slide in Treasuries. Trade fears dominated investors’ concerns, and this was amplified by data released by the U.S. Commerce Department showing a widening trade deficit. The 30-year fixed mortgage rate decreased 12 basis points over the week back below 5 percent, representing the largest single week drop since 2017.

As a result of these recent rate declines, we saw another weekly increase in refinance applications, along with a rise in the average refinance loan size. Larger loans tend to react more readily for a given change in mortgage rates. Meanwhile, purchase application activity also increased over the week and was up more than three percent compared to a year ago.

The MBA’s refinance index rose by 2% week over week and the percentage of all new applications that were seeking refinancing increased from 40.5% to 41.5%.

Adjustable rate mortgage loans accounted for 7.6% of all applications, up 0.2 points compared with the prior week.

According to the MBA, last week’s average mortgage loan rate for a conforming 30-year fixed-rate mortgage slipped from 5.08% to 4.96%, its lowest level since September. The rate for a jumbo 30-year fixed-rate mortgage dipped from 4.89% to 4.80%, also a three-month low. The average interest rate for a 15-year fixed-rate mortgage decreased from 4.50% to 4.41%, again the lowest level since September.

The contract interest rate for a 5/1 adjustable rate mortgage loan decreased from 4.33% to 4.24%. Rates on a 30-year FHA-backed fixed-rate loan dropped from 5.05% to 4.97%, the lowest level since September.