Marking the second consecutive week of decreased activity, mortgage application volume tumbled 9.6 percent for the week ending April 9, 2010, the ""Mortgage Bankers Association"":http://www.mortgagebankers.org/default.htm (MBA) reported Wednesday.[IMAGE]
This is the third lowest Market Composite Index recorded by the association since the end of June 2009.
According to MBA's Weekly Mortgage Applications Survey, the Refinance Index fell 9 percent from the previous week, which is the fifth straight week this index has declined. However, the refinance share of mortgage activity increased to 58.9 percent of total applications, up from 58.7 percent the previous week.[COLUMN_BREAK]
The Purchase Index, which dropped 10.5 percent from one week earlier, was also to blame for the overall decrease in application volume. MBA said the decline in purchase applications was driven by government purchase applications, which plummeted 19.1 percent from last week, compared to a 2 percent decrease in conventional purchase applications.
""Applications for government mortgages dropped substantially last week, following the implementation of an increase in FHA mortgage insurance premiums,"" said Mike Fratantoni, MBA's VP of research and economics. ""Applications for conventional mortgages also dropped last week, with refinance application volume continuing to drop following last week's jump in rates.""
A slump in mortgage application volume can often be attributed to an increase in interest rates, but that wasn't the case this time, as interest rates actually dropped from week to week.
MBA said the average contract interest rate for 30-year fixed-rate mortgages decreased to 5.17 percent from 5.31 percent, and the average rate for 15-year fixed-rate mortgages decreased to 4.45 percent from 4.54 percent.