Mortgage applications fell for the second consecutive week even as interest rates decreased to their lowest levels in the past year.

The Mortgage Bankers Association's applications index was down 3.1% for the week ending May 30. The latest figures include an adjustment for the Memorial Day holiday and follow a 1.2% drop last week. Before the last two weeks, mortgage applications experienced an uptick for three consecutive weeks.

Both the refinancing and purchase indexes declined from the prior week by 3% and 4%, respectively, the Washington-based trade group said. The refinance share of mortgage activity was up to 53% of total applications, while the adjustable-rate mortgage share remained unchanged at 8% of total applications.

The interest rate for a 30-year fixed mortgage was down five basis points 4.31%, the MBA said. Meanwhile, jumbo loan rates dropped on a weekly basis from 4.23% to 4.22%, and Federal Housing Administration-backed mortgage rates also dipped five basis points to 3.99%.

"Despite interest rates being near 12-month lows, the path to homeownership has been on hold for many potential buyers because of the lack of home inventory," Bill Banfield, vice president at Quicken Loans, said in an email.

"Even though the positive trend of rising home prices persists, many homeowners are still waiting to sell. The recovery will stay largely paused until homeowners gain confidence in the market and decide to list their home."

The MBA's weekly survey covers 75% of all retail residential mortgage applications.

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