A home mortgage sign on a Wells Fargo branch in Brooklyn, New York.Getty ImagesAn unexpected decline in mortgage interest rates had homeowners calling their lenders last week, looking to save money on their monthly payments.Refinance demand surged, pushing total mortgage application volume up 5.2% last week compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Volume was 69% higher than the same week one year ago, when interest rates were considerably higher.The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased to 3.90% from 3.99%, with points falling to 0.37 from 0.38 (including the origination fee) for loans with a 20% down payment. That rate was 115 basis points higher the same week one year ago.”U.S. Treasury rates moved sharply lower last week, as data showing weakness in the services sector was a sign that slowing economic growth is not confined to the manufacturing sector,” said Joel Kan, associate vice president of economic and industry forecasting at the MBA. “This in turn caused a flight to safety by investors, resulting in mortgage rates dropping across the board.”In response, rate-sensitive refinance applications jumped 10% from the previous week and were 163% higher than the same week one year ago. The refinance share of mortgage activity increased to 60.4% of total applications from 58.0% the previous week.Mortgage applications to purchase a home, which are less rate-sensitive week to week, decreased 1% from one week earlier but were 10% higher than the same week one year ago.”Despite low rates, the cloudier economic outlook and ongoing market uncertainty may be keeping some potential homebuyers away from the market this fall,” Kan said.Consumer sentiment on housing fell in September, according to another survey from Fannie Mae. More Americans said they were concerned about losing their job, and that in turn pulled housing sentiment down.