Mortgage applications dipped modestly last week following two weeks of gain according to the Mortgage Bankers Association (MBA) Survey. The 0.5% w/w decline followed gains of 4.2% and 7.3% during the prior two weeks.

The decline was due to a 4.8% drop in purchase applications. During the last ten years there has been a 59% correlation between the y/y change in purchase applications and the change in new plus existing home sales.

Applications to refinance rose another 4.1% following two weeks of gain but versus last year still are down 23.3%.

The effective interest rate on a conventional 30-year mortgage ticked higher to 5.75% but remained below the 5.89% averaged last month. The effective rate on a 15-year mortgage also rose to 5.41% last week.

The Mortgage Bankers Association surveys between 20 to 35 of the top lenders in the U.S. housing industry to derive its refinance, purchase and market indexes. The weekly survey accounts for more than 40% of all applications processed each week by mortgage lenders. Visit the Mortgage Bankers Association site here.