Refinance applications reached their lowest share in more than seven years even as mortgage rates fell last week, according to the Mortgage Bankers Association.

Total mortgage application volume decreased 0.8% for the week ended March 24, driven by a 3% decrease in the refinance index from the previous week.

The refinance share of mortgage activity decreased to 44% of total applications, the lowest percentage since October 2008, from 45.1% the previous week.

Although the Federal Open Market Committee raised short-term interest rates on March 15, the average for the 30-year fixed-rate mortgage slipped 13 basis points.

The seasonally adjusted purchase index increased 1% from one week earlier, while the unadjusted purchase index increased 2% compared with the previous week and was 4% higher than the same week one year ago, the MBA's Weekly Application Survey found.

The adjustable-rate mortgage share of activity decreased to 8.5% of total applications from 9%, while the Federal Housing Administration share decreased 1 basis point to 10.8% from the week prior.

The VA share of total applications increased to 11% from 10.1% and the USDA share of total applications increased 1 basis point to 1%.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($424,100 or less) decreased to 4.33% from 4.46%. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $424,100), the average contract rate decreased to 4.26% from 4.4%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.24% from 4.33%, while for 15-year fixed-rate mortgages, the average decreased to 3.57% from 3.68%.

The average contract interest rate for 5/1 ARMs decreased to 3.3% from 3.41%.

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