Mortgage refinancing picks up as rates drop

Rates on 30-year mortgages fell to 4.19 percent, the lowest level in decades. They were pushed down by lower Treasury bond yields.

Investors are buying up Treasury bonds in anticipation of a move by the Federal Reserve designed to lower mortgage rates and yields on corporate debt.

As a result, the average rate for 30-year fixed loans dropped to the lowest level on records dating back to 1971. It's down from 4.27 percent the previous week.

Rates have mostly fallen since spring as investors shifted money into the safety of Treasury bonds. That demand lowers their yields, which mortgage rates tend to track.

On Wednesday, the Mortgage Bankers Association said overall applications rose 14.6 percent from a week earlier, driven by a 21 percent increase in applications to refinance home loans. Applications for loans to purchase homes, however, tumbled 8.5 percent from a week earlier.

Mortgage rates tend to track those yields. However the weak economy has dissuaded would-be homebuyers from purchasing.

The Mortgage Bankers Association's survey covers more than 50 percent of all applications nationwide.