Mortgage applications declined 7.4% for the week ended March 16, as refinancing hit its lowest share of loan activity since July 2011.
The Mortgage Bankers Association seasonally adjusted index fell for the sixth straight week, with the refinance measure down 9.3% in a report Wednesday. Refinancings made up 73.4% of all mortgage apps, down from 75.1% a week earlier.
The purchase-mortgage index dropped 1% from the week prior.
The trade group's four-week moving average fell 2.79% overall, with purchase apps up 3.25% and refinancings down 4.31%.
The drop in refinancing apps, however, doesn't reflect huge increases of Home Affordable Refinance Program requests in some states, according to MBA Chief Economist Jay Brinkmann. He said all refinancing apps climbed in February from January in Nevada by 71%, Arizona by 61% and Florida by 49%.
"Refinances in the rest of the country were generally flat or even down," Brinkmann said in a release. "HARP clearly is a driving force in those states that saw the most defaults and the biggest drops in home equity."
Completed HARP refinancings dropped to a 25-month low in December, according to the Federal Housing Finance Agency. An agency spokeswoman said changes to the program that increased eligibility might not show until the release of first-quarter data.
The average interest rate on a 30-year, fixed-rate mortgage for a conforming loan rose to 4.19% from 4.06% a week earlier, according to the MBA. Rates on 30-year FRMs backed by the Federal Housing Administration increased to 3.93% from 3.82%.
The average purchase mortgage increased roughly 4% to $225,463 in February from $216,888 a month earlier, while refis dropped 2.4% to $222,048 from $227,563.