Applications for U.S. home mortgages surged last week, driven by increased refinancing demand as interest rates dropped, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, climbed 10.3 percent in the week ended Nov 4.

Treasury rates dropped last week, as renewed turmoil in Europe once again led to a flight to quality, and 30-year mortgage rates dropped to their second lowest level of the year, Mike Fratantoni, MBA's vice president of research and economics, said in a statement.

The MBA's seasonally adjusted index of refinancing applications rose 12.1 percent to its highest level in a month. Fratantoni said some lenders saw even bigger increases. Fixed 30-year mortgage rates dropped 9 basis points to average 4.22 percent.

The refinance share of total mortgage activity rose, after declining for three weeks, to 78.6 percent of applications from 77.1 percent the week before.

The gauge of loan requests for home purchases gained 4.8 percent.

The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

(Reporting by Leah Schnurr; Editing by Leslie Adler)