Mortgage interest rates fell to the lowest level in four months, but that did nothing to spark activity in the mortgage market.
Total mortgage application volume dropped 9.8 percent at the end of last week from two weeks earlier, according to the Mortgage Bankers Association's seasonally adjusted index. The results included an adjustment for the Christmas holiday. Volume was 21 percent lower than a year ago and the lowest level in 18 years.
The numbers are surprising, given that homebuyers and homeowners looking to refinance could have taken advantage of lower interest rates. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($453,100 or less) decreased to 4.84 percent from 4.86 percent a week earlier, with points decreasing to 0.42 from 0.47 (including the origination fee) for loans with a 20 percent down payment.