Despite lower mortgage rates, both refinancing and purchasing activity declined in the week ending March 12.

According to the Mortgage Bankers Association (MBA), the Refinance Index slipped 1.7% to ~2957 and the Purchase Index was down 2.3% to ~221.

Meanwhile, the average contract interest rate for 30-year fixed rate mortgages dropped 10 basis points to 4.91%.

Weak home price values, tight credit standards, and high unemployment are factors contributing to the muted response in refinancing activity despite near record low mortgage rate levels.

Purchasing activity, however, should start strengthening in the weeks ahead as the first time homebuyers tax credit is scheduled to expire on April 30.

The MBA also reported that as a percent of total applications, refinancing share remained almost the same at 67.3% from 67.2% in the previous week. The ARM share declined to 4.6% from 5.1%.

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