Despite the recent decline in mortgage rates, the Mortgage Bankers Association indicates application volume retreated by 1.5% from the previous two weeks.

This means on an unadjusted basis, the index fell by 1.5% for the week ending on Jan. 3, 2020.

The MBA indicates this week’s results include adjustments to account for the holidays.

“Mortgage rates dropped last week, as investors sought safety in U.S. Treasury securities as a result of the events in the Middle East, with the 30-year fixed mortgage rate declining to its lowest level (3.91%) since early October,” said Mike Fratantoni, MBA senior vice president and chief economist. “Despite lower rates, refinance volume decreased these last two weeks, and we expect that it will slowly rail off in the first half of 2020 as long as mortgage rates remain in this same narrow range.”

According to the organization, the Refinance Index fell by 8% from two weeks ago, while the seasonally adjusted Purchase Index rose 5% and the unadjusted Purchase Index fell by 14%.

“The end of the year is the slowest time for home sales, so it is not at all surprising that activity was light,” Fratantoni said. “However, after a seasonal adjustment, purchase application volume was up relative to the pre-holiday period and started off 2020 ahead of last year’s pace.”

Fratantoni said the nation’s strong job market will continue to support purchase activity throughout the new year, and the recent uptick in housing construction is likely to provide more housing for prospective buyers.

Here is a more detailed breakdown of this week’s mortgage application data:

• The refinance share of mortgage activity increased 58.9% from last week’s 54.8%.
• The adjustable-rate mortgage share of activity fell to 3.8% of total applications.
• The Federal Housing Administration’s share of mortgage apps moved forward to 12.2% from last week’s 12.1%.
• The Department of Veterans Affairs share of applications rose to 14.1% from last week’s 13.9%.
• The Department of Agriculture’s share of total applications fell from last week’s 0.6% to 0.5%.
• Mortgage interest rates for 30-year fixed-rate mortgages with conforming loan balances ($484,350 or less) decreased from last week’s rate of 3.95% to 3.91%.
• The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $484,350) retreated from last week’s 3.92% to 3.88%.
• The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 3.85% from last week’s 3.87%.
• The average contract interest rate for 15-year fixed-rate mortgages fell from last week’s 3.37% to 3.5%.
• The average contract interest rate for 5/1 ARMs dropped to 3.19% from last week’s 3.27%.