The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting a decrease of 5.8% in the group’s seasonally adjusted composite index for the week ending December 14. Mortgage interest rates dropped to their lowest levels since September on all five types of loans the MBA tracks.

On an unadjusted basis, the MBA’s composite index fell by 7% week over week. The seasonally adjusted purchase index also decreased by 7% compared with the week ended December 12. The unadjusted purchase index dropped by 10% for the week and was 2% higher year over year.

Mortgage loan rates for top-tier rose slightly last week from a prior week’s ending value of 4.71% to 4.78% for a 30-year fixed-rate loan, according to Mortgage News Daily. As of Tuesday night, top-tier borrowers were paying 4.69% on the same loan type. The yield on a 10-year U.S. Treasury note also dipped week over week from 2.88% to 2.82% last night. A year ago the 10-year note yielded 2.39%.

Joel Kan, the MBA’s associate vice president of Economic and Industry Forecasting, commented:

Despite mortgage rates falling across the board last week to their lowest levels in three months, mortgage applications also declined, as more potential borrowers likely stayed away because of ongoing financial market volatility and economic uncertainty. Purchase applications decreased almost seven percent over the week and refinances decreased around two percent, led by a larger decline in government refinances compared to conventional refinances.

With rates continuing to slide lower, refinance borrowers with larger loan balances seemed more apt to take action. The average loan balance for refinance loans increased to its highest level since September 2017.

The MBA’s refinance index slipped by 2% week over week, and the percentage of all new applications that were seeking refinancing increased from 41.5% to 43.5%.

Adjustable rate mortgage loans accounted for 7.9% of all applications, up 0.3 points compared with the prior week.

According to the MBA, last week’s average mortgage loan rate for a conforming 30-year fixed-rate mortgage slipped from 4.96% to 4.94%. The rate for a jumbo 30-year fixed-rate mortgage dipped from 4.80% to 4.74%. The average interest rate for a 15-year fixed-rate mortgage dropped from 4.41% to 4.37%.

The contract interest rate for a 5/1 adjustable rate mortgage loan decreased from 4.24% to 4.17%. Rates on a 30-year FHA-backed fixed-rate loan dropped from 4.97% to 4.95%.

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