The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications this morning, noting a drop of 1.2% in the group’s seasonally adjusted composite index, following a drop of 2.6% for the previous week. Mortgage loan rates fell in all categories last week.

The seasonally adjusted purchase index decreased by 2% from the last report. On an unadjusted basis, the composite index fell by 1% week-over-week. The unadjusted purchase index decreased by 2% for the week, and is up about 6% year-over-year.

The MBA’s refinance index fell by 1%, after sliding 1% in the previous week.

The share of refinancings remained unchanged at 63%, its lowest level in more than two years. Adjustable rate mortgage loans account for 7% of all applications, flat with the prior week.

The average mortgage loan rate for a conforming 30-year fixed-rate mortgage dropped from 4.68% to 4.58%. The rate for a jumbo 30-year fixed-rate mortgage decreased from 4.81% to 4.66%. The average interest rate for a 15-year fixed-rate mortgage fell from 3.70% to 3.63%.

The contract interest rate for a 5/1 adjustable rate mortgage loan fell from 3.39% to 3.30%.

Mortgage rates are pulling back and that should help new home sales, once the housing inventory gets built back up. It is really a matter of perception more than anything. Interest rates for mortgage loans continue to be very low by historical standards.

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