Total mortgage applications increased 8.8 percent on a seasonally adjusted basis last week from the previous week, as home-loan rates continued to slide, according to the Mortgage Bankers Association.

Refinance applications were behind much of the surge, rising 11 percent from the previous week, seasonally adjusted. The results include an adjustment for the Martin Luther King Jr. holiday.

“Borrowers are clearly seeing the rate drop as perhaps a last opportunity to seize on historically low rates. Refinance volume is still down 30 percent from the same week a year ago, when mortgage rates were even lower. Most economists predict that interest rates will rise steadily through 2016, although plunging equity markets in the U.S. and overseas have trumped that premise so far,” CNBC explained.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to its lowest level since October, 4.02 percent, from 4.06 percent, with points decreasing to 0.40 from 0.41 (including the origination fee) for 80 percent loan-to-value ratio loans.

"As a result of more financial market volatility and continued flight to quality by investors, mortgage rates have decreased 18 basis points since the first week of January 2016," said Joel Kan, an MBA economist.

"With a 30-year fixed rate of 4.02 percent in the most recent week, the refinance index was at its highest since the week ending October 1, 2015, a week when rates were 3.99 percent, and there was a rush of applications before the Know Before You Owe rule implementation deadline."

(Newsmax wire services contributed to this report).

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