Despite Low Interest Rates, Mortgage Applications Decrease

Following two consecutive weeks of growth, mortgage loan application volume fell 1.9 percent for the week ending March 12, 2010, the ""Mortgage Bankers Association"":http://www.mortgagebankers.org/default.htm (MBA) reported Wednesday.

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According to MBA's Weekly Mortgage Applications Survey, the Refinance Index declined 1.7 percent from the

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previous week, and during the same period, the seasonally-adjusted Purchase Index dropped 2.3 percent.

Although the volume of refinance activity decreased, its share slightly increased. MBA said refinance applications in this week's survey nudged up to 67.3 percent of total applications compared to 67.2 percent the week prior. However, the adjustable-rate mortgage (ARM) share of activity decreased to 4.6 percent, down from 5.1 percent the previous week.

The slump in mortgage application volume was surprisingly accompanied by a week-to-week drop in interest rates.

According to MBA, the average contract interest rate for 30-year fixed-rate mortgages decreased to 4.91 percent from 5.01 percent--the lowest 30-year fixed-rate observed in the survey since mid-December of 2009. In addition, the average rate for 15-year fixed-rate mortgages fell to 4.24 percent from 4.32 percent, and the average rate for one-year ARMs inched down to 6.75 percent from 6.8 percent