Mortgage activity stalled while long-term borrowing rates inched lower in the most recent week, which was shortened by the Independence Day holiday, according to a trade group.
The Mortgage Bankers Association's Wednesday said its weekly survey of mortgage loan applications decreased 6.3% in the week ended July 9.
The average rate for 30-year fixed-rate loans decreased to 5.95% from 5.96% one week earlier, while the rate on 15-year fixed-rate mortgages averaged 5.36%, down from 5.39%.
The average interest rate for one-year adjustable rate mortgages, or ARMs, increased to 3.93% from 3.90% one week earlier.
The refinance share of mortgage activity remained at 35.8%, while ARMs' share decreased to 31.5% from 34.1% the previous week.
Mortgage activity showed surprisingly strength in the previous week, as long-term rates fell after the
long-awaited increase in short-term interest rates. The Fed's 25-basis-point hike in its fed funds rate had little impact on the market.
Investors had rushed to lock in rates in previous months as mortgage rates rose in concert with the yield on the Treasury's 10-year note. But the yield on the benchmark note has fallen dramatically in recent weeks on repeated signs that the economic recovery is slowing. This trend may prompt the central bank to take a less aggressive approach in its monetary tightening cycle.