RTTNews - The Mortgage Bankers Association reported Wednesday that the volume of mortgage applications filed last week dropped nearly 19 percent from the previous week.

In its weekly mortgage applications report, the MBA said its measure of mortgage loan application volume fell to 444.8 in the week ended June 26th, an 18.9 percent decrease from 548.2 the week before, its biggest decline since February.

On an unadjusted basis, mortgage loan application volume was down 7.4 percent compared with the same week a year ago.

Demand for home refinancing loans fell 30 percent, with the refinance index falling to 1482.2 from 2116.3 in the previous week.

Homeowners have been discouraged from refinancing by recent gains in borrowing costs, and the share of applicants looking to refinance loans dropped to 46.4 percent of total applications last week. The share was 54 percent the previous week.

The report also showed that the Purchase Index fell 4.5 percent to 267.7 from 280.3 one week earlier.

The average contract interest rate on 30-year fixed-rate mortgages decreased to 5.34 percent, which is still significantly higher that the all-time low of 4.61 recorded in March. The rate was 6.33 percent in the same week last year.

This is the fifth straight week that costs on 30-year fixed-rate mortgages remained above 5 percent, but costs on 15-year mortgages fell to 4.81 percent from 4.93 percent the week before.

The interest rate on one-year adjustable mortgages decreased to 6.52 percent from 6.54 percent, and the adjustable rate mortgage share of applicants increased from 4.1 percent to 4.3 percent.

Before this reported drop, the United States housing market appeared to be showing signs of stabilization. Sales were increasing among buyers still able to qualify for credit and home price declines began to moderate in many areas of the country.

Orawin Velz, Associate Vice President of Economic Forecasting for the MBA, told RTTNews that while the market might be showing signs of stability, its recovery would be quite modest.

Velz added that the market would see some increase in purchase demand, but a big jump should not be expected.

The MBA's mortgage application survey has been conducted weekly since 1990 and covers 50 percent of all United States retail residential mortgage applications.

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