Mortgage applications drop despite decline in rates

The mortgage market continues to fluctuate as applications decreased last week, one week after they increased 13 percent.

According to the Mortgage Bankers Association's weekly applications survey, mortgage loan volume decreased 6.5 percent on a seasonally adjusted basis from one week earlier.

The four week moving average dipped 2.5 percent, a minor change. Since the expiration of the federal tax credit for homebuyers, however, it's down almost 20 percent compared to the same week a year ago.

The declines come despite the 30-year fixed-rate mortgage dropping to 4.8 percent from 5 percent, the third consecutive week the contract rate has dropped.

Fifteen-year fixed-rate mortgages dropped from 4.28 to 4.17 percent last week.

Frank Nothaft of Freddie Mac says mortgages "continue to be very affordable," but the rate at which people are taking advantage of them depends upon the region. One of the leading challenges the housing market must overcome is the unemployment rate, as it remains high in many parts of the country.