Mortgage applications increased 10.3% this past week as more homeowners refinanced existing mortgages or took advantage of lower interest rates to buy homes. The Mortgage Bankers Association said its market composite index – a measure of loan application volume – increased 10.3% on a seasonally adjusted basis from a week earlier. On an unadjusted basis, the index grew 9.9% from the previous week. Meanwhile, refinancing activity soared with the index that measures refinance loans jumping 12.1% from the previous week. The seasonally adjusted purchase index also rose 4.8% “Treasury rates dropped last week, as renewed turmoil in Europe once again led to a flight to quality, and 30-year mortgage rates dropped to their second lowest level of the year,” said Mike Fratantoni, MBA’s vice president of research and economics. “Refinance applications jumped more than 12 percent to their highest level in a month and some lenders experienced even larger increases. As has been the case all year, many refinance applicants are opting to deleverage by choosing 15-year mortgages.” Refinancing activity made up 78.6% of all mortgage applications, up from 77.1% a week earlier. Meanwhile, the average interest rate for a 30-year, FRM with conforming loan limits of $417,500 or less fell to 4.22% from 4.31% a week earlier. In addition, the average rate on a 30-year, FRM with a jumbo balance of $417,500 or greater fell to 4.57% from 4.69%. The rate for a 30-year mortgage backed by FHA fell to 4.02% from 4.09% last week. The average rate on a 15-year, FRM fell to 3.54% from 3.63%, while the interest rate on a 5/1 ARM fell to 3.01% from 3.09%. Write to Kerri Panchuk.