Overall mortgage application volume cooled again last week despite falling interest rates, the Mortgage Bankers Association reported today.

The market composite index, which measures total home loan volume, dipped 0.3 percent last week on a seasonally adjusted basis from the week before. The 1.8 percent decrease in the index that tracks home purchases slightly outweighed the 1.8 percent gain in the refinancing index, according to the report.

The refinance share of mortgage activity is now up to 39.4 percent of applications, and the adjustable-rate mortgage (ARM) share has reached 22.3 percent, MBA reported.

Borrowing costs on long-term loans dropped further in the latest survey, as the average contract interest rate on 30-year fixed-rate mortgages last week fell to 6.5 percent from 6.59 percent, and the rate on 15-year fixed-rate loans dipped to 6.2 percent from 6.24 percent. The rate on the one-year ARM, however, rose to 5.73 percent from 5.62 percent.

Points, or loan-processing fees expressed as a percent of the total loan amount, averaged 1.66 on the 30-year loans, 1.3 on the 15-year, and 1.12 on one-year ARMs. These points include the origination fee and are based on loan-to-value ratios of 80 percent.

The Mortgage Bankers Association 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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