Mortgage application volume fell by 2.9% for the week ended Jan. 27 from the previous week, even though mortgage interest rates declined for fixed-rate mortgages, according to the Mortgage Bankers Association.
The Refinance Index decreased 3.6% from the previous week, while the seasonally adjusted Purchase Index decreased 1.7%. The unadjusted Purchase Index was 4.3% lower than the same week one year ago. The market share of refi apps fell to 80% from 81.3%.
"The Federal Reserve surprised the market last week by indicating that short-term rates were likely to stay at their current low-levels until the end of 2014. Longer-term treasury rates dropped in response, and mortgage rates for the week were down slightly as a result," said Michael Fratantoni, MBA's vice president of research and economics.
"Although total application volume dropped on an adjusted basis relative to last week, refinance volume remains high, with survey participants reporting that the expanded Home Affordable Refinance Program contributed to roughly 10% of their refinance activity.”
The average contract rate for the 30-year fixed-rate conforming mortgage (loans under $417,500) fell by two basis points to 4.09%, while for jumbo loans, it fell by six basis points to 4.33%.
For Federal Housing Administration-insured loans, the average contract rate was 3.96%, down one basis point. For the 15-year FRM, the average contract rate fell four basis points to 3.36%.
