US mortgage rates slid last week to one of the lowest levels in years, sparking a flurry of purchase and refinancing activity that offers hope for a plodding housing market.

The contract rate on a 30-year mortgage dropped 7 basis points to 6.18% in the week ended Jan. 9, according to Mortgage Bankers Association data released Wednesday. That's the lowest reading since September 2024 and one of the lowest since 2022.

The rate on a five-year adjustable mortgage plunged nearly a half percentage point to 5.42%, the second-lowest since May 2023.

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Against a backdrop of cheaper home-financing costs, MBA's purchase index increased nearly 16% last week to the second-highest level since February 2023. The refinancing gauge jumped by more than 40%, the most since September. Large weekly swings in mortgage activity are typical around the turn of the year and near holidays. 

Nonetheless, the figures illustrate some relief for a housing market that's been battered by poor affordability in recent years. Government data out Tuesday showed the annualized pace of new-home sales in October was near the strongest since 2023, helped by builder incentives and price cuts.

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In hopes of improving housing affordability, President Donald Trump has proposed banning institutional investors from buying single-family homes. He also directed Fannie Mae and Freddie Mac to purchase $200 billion in mortgage bonds in an effort to lower home-financing costs.

The MBA survey, which has been conducted weekly since 1990, uses responses from mortgage bankers, commercial banks and thrifts. The data cover more than 75% of all retail residential mortgage applications in the US.