Home loan application volume sank 11.1 percent last week on a seasonally adjusted basis from one week earlier despite a drop in interest rates, the Mortgage Bankers Association reported today.

According to the trade group, the decrease was led by a 16.7 percent drop in the index that tracks refinancings, followed by a 4.8 percent decline in purchase loan applications.

As a result, the refinance share of loan applications fell to 45.7 percent from 49.2 percent at mid-month, while the adjustable-rate mortgage (ARM) share slipped to 5.9 percent from 6.6 percent.

Home loan application volume sank 11.1 percent last week on a seasonally adjusted basis from one week earlier despite a drop in interest rates, the Mortgage Bankers Association reported today.

According to the trade group, the decrease was led by a 16.7 percent drop in the index that tracks refinancings, followed by a 4.8 percent decline in purchase loan applications.

Economists believe that many would-be buyers are waiting for home prices to fall even more to avoid taking a loss after purchase.

As a result, the refinance share of loan applications fell to 45.7 percent from 49.2 percent at mid-month, while the adjustable-rate mortgage (ARM) share slipped to 5.9 percent from 6.6 percent.

The average rate for 30-year fixed-rate mortgages dipped to 6.01 percent last week from 6.04 percent; the average rate on 15-year fixed loans declined to 5.53 percent from 5.6 percent; and the average one-year ARM rate decreased to 6.86 percent from 6.93 percent.

The points (loan fees expressed as a percent of the loan amount) that borrowers paid to attain these rates rose across all loan types. On 30-year loans, points gained from 1.04 to 1.26; on 15-year loans they increased from 1.06 to 1.24; and they inched up from 1.38 to 1.4 on one-year ARMs.

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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