A decline in mortgage rates has boosted homebuyer interest in recent weeks.

Demand for mortgage applications climbed 2.9% from a week earlier, according to the weekly survey from the Mortgage Bankers Association.

Mortgage rates have been moving lower since the collapse of Silicon Valley Bank triggered fears of a broader banking meltdown.

"Application activity increased as mortgage rates declined for the third straight week", said Joel Kan, MBA’s vice president and deputy chief economist. "The 30-year fixed rate declined to 6.45%, the lowest level in over a month." 

MORTGAGE RATES POST BIG DECLINE AMID SILICON VALLEY BANK FALLOUT

The decline in rates sparked interest among the other homebuying metrics.

The refinance index increased 5% percent from the previous week.

"Refinance activity also picked up last week, but remains 61 percent below last year’s pace", added Kan. "Most homeowners still have rates significantly lower than current levels, leaving only a small pool of borrowers with an incentive to refinance." 

The purchase index increased 2% from one week earlier. 

US HOME PRICES FELL IN JANUARY FOR SEVENTH STRAIGHT MONTH

"While the 30-year fixed rate remained 1.65 percentage points higher than a year ago, homebuyers responded, leading to a fourth straight increase in purchase applications," said Kan. "Homeprice growth has slowed markedly in many parts of the country, which has helped to improve buyers’ purchasing power."

The average contract interest rate for 30-year fixed mortgages decreased to 6.45% from 6.48%.

SPRING HOME BUYING SEASON SHOWS 'STEADY DEMAND' AS MORTGAGE RATES SLIP FOR SECOND WEEK

The survey covers over 75% of all U.S. retail residential mortgage applications and has been conducted weekly since 1990.