Dow Jones Newswires

6:32 a.m. CST, December 21, 2011

The number of mortgage applications filed in the U.S. last week fell 2.6 percent from the prior week, the Mortgage Bankers Association said Wednesday, even as interest rates reached their lowest levels of the year.

Refinance activity slipped 1.6 percent, according to the MBA’s weekly survey, which covers more than three-quarters of all U.S. retail residential mortgage applications. Purchasing fell by a seasonally adjusted 4.9 percent during the week ended Friday.

Lenders continue to charge interest at historically low levels, but they have faced challenges enticing  new borrowers this year as high unemployment and tighter lending requirements continue to pressure new applications.

“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,” MBA vice president Michael Fratantoni said.

The four-week moving average for all mortgage applications is up 0.26 percent.

The share of applications filed to refinance an existing mortgage rose to 80.7 percent of total applications, a high for the year, up from 79.7 percent the previous week. Adjustable-rate mortgages made up 5.1 percent of activity last week, down from 5.6 percent a week earlier.

The average rate on 30-year fixed-rate mortgages with conforming loan balances fell to 4.08 percent from 4.12 percent, while rates on similar mortgages with jumbo loan balances decreased to 4.44 from 4.47 percent. The average rate on FHA-backed 30-year fixed-rate mortgages slipped to 3.93 from 3.94 percent.

The average for 15-year fixed-rate mortgages eased to 3.39 from 3.44 percent, while the 5/1 ARM average decreased to 2.9 from 2.93 percent.

Each average rate reached a new low for 2011.