Despite mortgage rates falling to their lowest level this year, mortgage applications dropped 2.6% last week from one week earlier, the Mortgage Bankers Association (MBA) reports.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 4.08% last week from 4.12%.
The MBA's unadjusted Market Composite Index fell 2.8% compared to the previous week. The Refinance Index decreased 1.6%, and the seasonally adjusted and unadjusted Purchase Index decreased 4.9% and 7.5%, respectively.
‘Continued anxiety surrounding the fragile economic situation in Europe led interest rates lower last week," explains Michael Fratantoni, the MBA's vice president of research and economics. "However, refinance applications fell slightly, and purchase applications dropped further as we head into the end of the year. Remarkably low rates are not enough, as many homeowners continue to hold back due to lack of equity in their properties, poor credit and a weak job market.’