Residential loan applications fell by 1.5% on a seasonally adjusted basis last week, but there was a slight improvement in new purchase money loans, according to figures compiled by the Mortgage Bankers Association.
The trade group said the refi share of new applications declined to 81.9% of all new business from 82.9% the week prior. MBA tracks loan activity through a proprietary index.
A lack of home buying by consumers is a major concern for both lenders and policy makers in Washington who are hoping for a revival in the housing market.
"Purchase activity remains well below levels seen prior to the expiration of the homebuyer tax credit, and is almost 40-percent below the level recorded one year ago," said Michael Fratantoni, MBA's vice president of research and economics.
"On the other hand, refinance volume dropped last week for the first time in six weeks, but the level of applications to refinance remains close to recent highs, as historically low mortgage rates continue to draw borrowers into the market."
MBA's refinance index fell 3.1%. Purchase applications are at their highest level since May with the index increasing 6.3% from the previous week — but down nearly 40% from the same period a year ago.
MBA reported that the average contract interest rate for a 30-year fixed rate mortgage increased by 17 basis points to 4.60% from 4.43% the week prior. Points decreased to 0.96 from 1.34 (including the origination fee) for loans with an 80% loan-to-value ratio.
Meanwhile, the average contract interest rate for a 15-year FRMs increased by 12 bps during the week to 4.00% with points decreasing to 0.87 from 1.45.
