Applications for new mortgages jumped 8.1 percent in the past week as the 30-year fixed-rate mortgage dropped below 4 percent, according to the Mortgage Bankers Association's Weekly Mortgage Application Survey.

The Refinance Index increased 14 percent from the previous week and was 133 percent higher than the same week one year ago. 

"Mortgage rates mostly decreased last week, with the 30-year fixed rate dropping below 4 percent for the sixth time in the past nine weeks. Borrowers responded to these lower rates, leading to a 14 percent increase in refinance applications," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting.

"Although refinance activity slowed in September compared to August, the months together were the strongest since October 2016. The slight changes in rates are still causing large swings in refinance volume, and we expect this sensitivity to persist."

Added Kan, "Purchase applications also increased and remained more than 9 percent higher than a year ago. Low rates and healthy housing market fundamentals continue to support solid levels of purchase activity."

The refinance share of mortgage activity increased to 58.0 percent of total applications from 54.9 percent the previous week. 

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 3.99 percent from 4.02 percent.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.43 percent from 3.46 percent.