Mortgage App. Volume Slumps as Refinance and Purchase Activity Wane

Following a 17.7 percent surge the week prior, mortgage loan application volume fell 5.9 percent for the week[IMAGE]

ending June 18, 2010, due to a drop-off in both refinance and purchase applications, the ""Mortgage Bankers Association"":http://www.mortgagebankers.org/default.htm (MBA) reported Wednesday.

According to MBA's Weekly Mortgage Applications Survey, the refinance index tumbled 7.3 percent from the

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previous week. As a result, the refinance share of mortgage activity edged down to 73.8 percent of total applications compared to 74.8 percent one week earlier.

In addition, the purchase index inched down 1.2 percent from the week prior. MBA said the decline in total purchase applications was driven by a 4.4 percent drop in government applications, as conventional purchase applications actually increased 1 percent.

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

MBA said the average contract interest rate for 30-year fixed-rate mortgages fell to 4.75 percent from 4.82 percent, marking the lowest 30-year contract rate observed in the survey since the week ending May 15, 2009.

Additionally, the average contract interest rate for 15-year fixed-rate mortgages slid down to 4.19 percent from 4.23 percent, MBA said.