NEW YORK (Reuters) - The share of U.S. mortgage refinancing activity contracted last week to its smallest in more than 8-1/2 years amid a jump in home borrowing costs this year, Mortgage Bankers Association data released on Wednesday showed.

A woman looks at real estate listings at an office in the Brooklyn borough of New York, U.S. March 21, 2017. REUTERS/Brendan McDermid

The refinance share of overall mortgage activity fell to 41.6 percent in the week ended April 7, the lowest level since September 2008. It was 42.6 percent in the previous week.

The average interest rate on 30-year, fixed-rate conforming mortgages, the most widely held type of U.S. home loan, fell to 4.28 percent, up 46 basis points from a year ago. It was 4.34 percent in the prior week.

Conforming loans are those with balances of $424,100 or less and that qualify for guarantees from federal mortgage agencies Fannie Mae FNMA.PK and Freddie Mac FMCC.PK.

MBA’s seasonally adjusted gauge of applications to refinance an existing home loan was little changed, hovering at a six-week low at 1,272.3. It was 40 percent lower than 2,122.0 a year earlier.

“With the rates today, it’s hard to get back to a refinancing boom anytime soon,” said Chris Nard, president of mortgage at Citizens Bank in Boston.

Mortgage rates had jumped in step with U.S. bond yields following Donald Trump’s surprise U.S. presidential win. Traders had bet he and a Republican-controlled U.S. Congress would quickly enact tax cuts and infrastructure spending and loosen regulations, spurring business investments and inflation.

Home loan costs and Treasury yields US10YT=RR have retreated in recent weeks after Trump and leading Republican lawmakers failed to pass healthcare reform, causing traders to pare bets on rising inflation.

Worries about the French presidential election and tension between the United States and Syria as well as North Korea have sent bond yields and mortgage rates even lower.

Meanwhile, the Washington-based industry group said its seasonally adjusted gauge of application activity to buy a home, a proxy for future home sales, rose 2.9 percent at 246.7 in the latest week. It was 241.9 a year ago.

“We are optimistic about home sales this spring and the upcoming summer season,” Citizens Bank’s Nard said.

MBA’s measure on overall mortgage applications rose 1.5 percent to 402.9, its first increase in four weeks. It was 520.2 a year earlier.

The share of applications for adjustable-rate mortgages was unchanged from the preceding week at 8.5 percent.