Despite a third consecutive week of lower interest rates, overall mortgage applications continued to decline, falling 1.2 percent on a seasonally adjusted basis from the week before, the Mortgage Bankers Association reported today.

The seasonally adjusted purchase index decreased by 3.3 percent last week to 376.2 from 389 the previous week, and is now at its lowest since November 2003, MBA reported. The refinance index, however, increased by 2.3 percent to 1,417.2 from 1,385.2 one week earlier.

The refinance share of mortgage activity increased to 37 percent of total applications from 35.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 27.8 percent of total applications from 28.6 percent the previous week, and is at its lowest since March 2004.

The average contract interest rate for 30-year fixed-rate mortgages decreased to 6.62 percent from 6.69 percent, with points including the origination fee decreasing to 1 from 1.07 for 80 percent loan-to-value ratio loans.

Points, which are fees charged by lenders for loan processing, are expressed as a percent of the total loan amount.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 6.28 percent from 6.31 percent. Points including the origination fee decreased to 1 from 1.07 for 80 percent loan-to-value ratio loans.

The average contract interest rate for one-year ARMs decreased to 6.18 percent from 6.25 percent, with points including the origination fee decreasing to 0.81 from 0.83 for 80 percent loan-to-value ratio loans.

Washington, D.C.-based Mortgage Bankers Association is a national association representing the real estate finance industry. The survey covers approximately 50 percent of all U.S. retail residential mortgage originations, and has been conducted weekly since 1990. Respondents include mortgage bankers, commercial banks and thrifts.

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