U.S. mortgage applications last week had their biggest seven-day surge in more than three months, driven by rates that fell below 6 percent for the first time since April.

"People have definitely been responding" to the down-tick in borrowing costs, said Denise Leonard, senior vice president of Constitution Financial Group in Saugus, a mortgage specialist.

For the week ended July 2, the Mortgage Bankers Association's overall index of applications rose 19.5 percent from the previous week, the biggest percentage gain since mid-March.

Its index of mortgage applications tied to a home purchase rose 15 percent. The index that gauges mortgage refinancing was up 27.6 percent -- the first increase in three weeks.

Consumers have been buying homes at a steady pace all year, but there had been a lull in refinancing, according to one industry index.

"We're seeing a lot of people buying a second home," said John Brodrick, president of First Service Home Mortgage, a mortgage broker and lender in Westwood. "They're saying, 'Grab it now because rates are eventually going to go up.' "

Nationwide, the average rate last week for 30-year fixed-rate mortgages fell to 5.96 percent from 6.21 percent the previous week, the Mortgage Bankers Association reported Wednesday.

That's good news for house hunters and homeowners looking to refinance, said John Bitner, chief economist for Eastern Investment Advisors, a unit of Eastern Bank in Boston. "We're still within 1 percent of the lowest mortgage rates that people have seen in their lifetime," he said.

The dip in mortgage rates is a fallout from a disappointing jobs report issued last week. Mortgage rates move in step with yields of U.S. Treasury notes, which fell after the jobs data were released.

"Gradually, mortgage rates will ratchet up," Bitner said. "A year to a year-and-a-half from now, we could be looking at 7 percent."

After all the refinancing activity of 2002 and the first half of 2003, there would seem to be few homeowners left who have not refinanced. But that isn't the case, mortgage brokers said. Consumers with adjustable-rate mortgages might want to lock into a fixed rate, and those with low- or no-down payment mortgages, which often come with higher rates, could find a lower rate, brokers said.

"In general, people who are refinancing are looking for a fixed rate," Leonard said.

Brodrick said about 30 percent of his customers who are buying a home choose an adjustable-rate mortgage.

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