mortgage rates in the United States fell to their lowest level in nearly a year last week, stimulating a surge in refinancing activity and prompting potential homebuyers to enter the market. According to data released by the Mortgage Bankers Association (MBA) on Wednesday, as of the week ending September 5, the 30-year fixed-rate mortgage contract rate dropped 15 basis points to 6.49%. Rates for 15-year fixed-rate loans and five-year adjustable-rate loans also fell to their lowest levels in about a year.

This decline was enough to push MBA's mortgage activity index (covering home purchases and refinancing) to its highest level in three years. If financing costs continue to decline, it will provide much-needed support for the sluggish real estate market. Residential construction has been a weak spot in the U.S. economy - in the past five quarters, four quarters have been a drag on Gross Domestic Product (GDP). MBA's home purchase index rose 6.6%, reaching its highest level since the first week of July. The refinancing index rose by over 12%, reaching its highest level in nearly a year.