Weekly applications for mortgages zoomed 49.1% for the week ending January 9, the biggest weekly increase recorded by the Mortgage Bankers Association since 2008.  In raw numbers the spike was even bigger. On an unadjusted basis, the Index increased 119 percent compared with the previous week.

But don’t break out the bubbly quite yet. The biggest boost was in refi applications as rates continue to fall through the basement and those few remaining wealthy homeowners who haven’t refied yet blessed their lucky stars and called their lenders.

The Refinance Index increased 66 percent from the previous week to the highest level since July 2013. Conventional refinance volume increased to a greater extent than government refinance volume.  Applications for larger refinance loans increased more than 4 times relative to the previous week and the average conventional refinance application increased to $298,700 from $233,500.

Applications for purchase loans also rose, but not as high. In fact, their market share declined as the refinance share of mortgage activity increased to 71 percent of total applications from 65 percent the previous week.

Purchase application volume increased by almost 24 percent over the previous week, with stronger growth for conventional applications than for government loans.   Purchase application volume was at its highest level since September 2013, increased on a year over year basis in the aggregate, and notably increased across most loan size categories, particularly for the conforming, middle of the market loan segments that had been weak for much of the past year.  FHA purchase application volume was up by 17 percent for the week on a seasonally adjusted basis.

Clearly plunging rates drove the application spike.  Rates reached their lowest level since May of 2013, and refinance application volume soared, more than doubling on an unadjusted basis, and up 66 percent after adjusting for the fact that the previous week included the New Year’s holiday.   Conventional refinance volume increased to a greater extent than government refinance volume.

Despite the recently announced cut in FHA’s mortgage insurance premium, the FHA share of total applications decreased to 7.5 percent this week from 9.3 percent last week.