Both refinancing and purchase activity fell last week despite further reduction in mortgage rates. 

According to the Mortgage Bankers Association, the seasonally adjusted Refinance Index plunged 14.3% to ~2858 after four weeks of gains, as the average contract interest rate for 30-year fixed mortgage rates slipped two basis points to 4.81%. 

As a percent of total application activity, refinancing share declined to 72.2% from 73.8% in the previous week.

"Despite the historically low rates, many homeowners have already refinanced recently, remain underwater on their mortgages, have uncertain job situations, or have damaged credit following this downturn, and therefore may not qualify to refinance," Michael Fratantoni, MBA's vice president of research and economics said.

The Purchase Index also fell 5.7% to ~168 as fallout continues following expiration of the homebuyers tax credit. This is the lowest the index has been since early 1997. 

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