Mortgage applications declined 3.7% for the week ending December 30, an industry trade group said Wednesday.

The Mortgage Bankers Association said its weekly mortgage applications survey reported declines for the two-week period running from Dec. 16 through Dec. 30.

In the most recent week, the refinance index was down 1.9% after experiencing a surge in year-end activity. In addition, the seasonally adjusted purchase index fell 9.7% from two weeks ago. Still, the MBA noted a significant increase in year-end mortgage activity when compared to last year. In fact, the market composite index – a measure of total mortgage application volume – was 39% higher in the last two weeks of 2011 when compared to the final two weeks of 2010.

In addition, the refinance share of mortgage activity for the week ending Dec. 30 jumped to 81.9% of total applications, making it the highest refinance share of the year, the MBA said.

“Refinance applications continue to account for the vast majority of total application volume, with the refinance share reaching its highest level in 2011,” said Michael Fratantoni, vice president of research and economics for the MBA. “As part of legislation to extend the payroll tax holiday, guarantee fees for loans purchased by the GSEs and mortgage insurance premiums for FHA loans will eventually increase.”

The average, 30-year, fixed-rate mortgage on a conforming loan fell to 4.07%, making it the lowest rate in this category for 2011. On jumbo loans, the 30-year, FRM hit 4.41% and the average 30-year, FRM on an FHA loan hit 3.96%. The 15-year, FRM stayed well below 4% at 3.37%. In addition, the interest rate for 5/1 ARMs hovered at 2.91%.

Write to Kerri Panchuk.