mortgage applications fell last week even as rates hovered at their lowest level since early september the drop illustrates the volatility in housing demand a trade group’s deputy chief economist said the mortgage bankers association’s composite index which tracks the weekly volume of applications for home purchase and refinance loans fell 9 on a seasonallyadjusted basis last week the trade group said refinance volume dropped 7 while purchase loan volume fell a seasonallyadjusted 10 according to the trade group’s data on a yearoveryear basis the refinance index was 80 lower while the purchase index was 41 lower the drop in application volume does not appear to have been driven by a rise in rates the average rate on a 30year fixedrate mortgage last week was 619 the association said the lowest rate measured by the trade group since early september rather the drop comes down to volatility joel kan the trade group’s deputy chief economist said in a statement “overall application activity declined last week despite lower rates which is an indication of the still volatile time of the year for housing activity” he said the decline in purchase application volume follows two weeks of increases as mortgage rates dropped the pickup in volume combined with other data points such as a december increase in pending home sales to offer an early indication that buyers were responding to lower mortgage rates while the trade group’s purchase application index snapped its twoweek streak of gains it’s still 16 off its multiyear low set in the first week of january according to the association’s data kan said he expects slower price growth and lower rates to lure buyers back into the housing market during the spring season “mortgage rates declined for the fourth straight week and have now fallen almost 40 basis points over the past month” the economist said adding that the unusually wide spread between the 30year fixedrate mortgage and the 10year treasury has narrowed recently “further narrowing of that spread is expected to put downward pressure on mortgage rates in the coming months”