Mortgage demand eased last week despite interest rates staying at a record low.

Mortgage applications decreased 8.7 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.

The Market Composite Index, a measure of mortgage loan application volume, decreased 8.7 percent on a seasonally adjusted basis from one week earlier. The Refinance Index decreased 12 percent from the previous week and was 76 percent higher than the same week one year ago. 

"Mortgage applications decreased 9 percent last week, with both refinance and purchase activity falling despite the 30-year fixed rate mortgage staying at 3.30 percent - the record low in MBA's survey," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Refinance applications dropped to their lowest level in three weeks, but the index remained 76 percent higher than a year ago. Despite the decline last week, MBA still anticipates refinance originations to increase to $1.35 trillion in 2020 - the highest level since 2012."

Added Kan, "Even with high unemployment and economic uncertainty, the purchase market is strong. Activity has climbed above year-ago levels for five straight weeks and was 18 percent higher than a year ago last week. One factor that may potentially crimp growth in the months ahead is that the release of pent-up demand from earlier this spring is clashing with the tight supply of new and existing homes on the market. Additional housing inventory is needed to give buyers more options and to keep home prices from rising too fast."

The refinance share of mortgage activity decreased to 61.3 percent of total applications from 63.2 percent the previous week.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) remained unchanged at 3.30 percent.

The average contract interest rate for 15-year fixed-rate mortgages increased to 2.81 percent from 2.80 percent.

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