The numbers: U.S. mortgage applications surged as rates fell across the board in the last week.

The 30-year mortgage rate was averaging at the lowest level in three weeks.

A drop in rates boosted home-buying and refinancing demand. The overall market composite index—a measure of mortgage application volume—increased in the last week, according to the Mortgage Bankers Association (MBA) said on Wednesday.

The market index rose 10.4% to 210.5 for the week ending January 12 from a week ago. A year ago, the index stood at 239.2.

Key details: The purchase index—which measures mortgage applications for the purchase of a home—rose 9.2% from a week ago.

The refinance index increased by 10.8%, led by those refinancing conventional mortgages.

The average contract rate for the 30-year mortgage for homes sold for $726,200 or less was 6.75% for the week ending January 12. That’s down from 6.81% from the week before.

The rate for jumbo loans, or the 30-year mortgage for homes sold for over $726,200, was 6.86%, down from 6.98% the previous week.

The average rate for a 30-year mortgage backed by the Federal Housing Administration was down to 6.46% from 6.56%.

The 15-year rose to 6.24% from 6.41% from the previous week.

The rate for adjustable-rate mortgages rose to 6.14% from last week’s 6.17%.

The big picture: The housing market is warming up as rates fall. Lower rates will not only bring buyers back to the table, they’ll also make it attract homeowners with low interest rates who otherwise would be unwilling to sell.

If the economy weakens, and if rates fall further, the gap between housing demand and supply will be more evenly matched, but until then the former outpaces the latter, pushing home prices up.

What the MBA said: “Although purchase activity is lagging year-ago levels, refinance applications have improved from their recent low point and have been showing year-over-year gains, albeit at low levels,” Joel Kan, vice president and deputy chief economist at the MBA, said in a statement.

“If rates continue to ease, MBA is cautiously optimistic that home purchases will pick up in the coming months,” he added.

Market reaction: The yield on the 10-year Treasury note was over 4% in early morning trading Wednesday.

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