Mortgage applications increased 5.6% from one week earlier, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending October 10, 2014.

The Market Composite Index, a measure of mortgage loan application volume, increased 5.6% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 6% compared with the previous week. The Refinance Index increased 11% from the previous week. The seasonally adjusted Purchase Index decreased 1% from one week earlier. The unadjusted Purchase Index decreased 0.3% compared with the previous week and was 4% lower than the same week one year ago.

“Growing concerns about weak economic growth in Europe caused a flight to quality into US assets last week, leading to sharp drops in interest rates. Mortgage rates for most loan products fell to their lowest level since June 2013,” said Mike Fratantoni, MBA’s chief economist. “Refinance application volume reached the highest level since June 2014 as a result, with conventional refinance volume at its highest since February 2014.”

The refinance share of mortgage activity increased to 59% of total applications, the highest level since February 2014, from 56% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 8.0% of total applications.

“Weak economic growth across the globe has helped U.S. interest rates fall to the lowest levels since last summer,” said Quicken Loans vice president Bill Banfield. “Homeowners that have increasingly been seeking cash-out refinances may find these levels very attractive and timely, given industry changes that will reduce loan-to-values on cash-out refinances in December.”

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) decreased to 4.20%, the lowest since June 2013, from 4.30%, with points decreasing to 0.17 from 0.19 (including the origination fee) for 80% loan-to-value ratio loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,000) decreased to 4.14%, the lowest since May 2013, from 4.21%, with points decreasing to 0.10 from 0.29 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.90%, the lowest since June 2013, from 4.00%, with points decreasing to 0.08 from 0.15 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.41%, the lowest since July 2014, from 3.48%, with points decreasing to 0.28 from 0.32 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.05%, the lowest since June 2013, from 3.20%, with points increasing to 0.38 from 0.37 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.