The Mortgage Bankers Association released an abbreviated report Wednesday on mortgage activity over the two week Christmas and New Year's holiday periods. The combined Weekly Mortgage Applications Survey covered the work weeks which ended on December 30 and was both seasonally adjusted and adjusted to reflect the shortened schedule.

Mortgage applications over the two weeks decreased 3.7 percent from the previous period, the week ended December 16.  The Refinance Index was down 1.9 percent from the previous period and the seasonally adjusted Purchase Index decreased 9.7 percent.  On a year over year basis the Market Composite Index, a measure of total mortgage loan application volume was 39 percent higher than in the comparable two week period in 2010.

The share of refinancing applications to total applications volume set a record for the year, finishing up at 81.9 percent, up from 80.7 percent in the previous summary.

Because of the two week reporting period, MBA did not give the usual four week moving averages for the indices.

"Mortgage application activity declined over the last two weeks, even after adjusting for the typical seasonal decline in activity.  Refinance applications continue to account for the vast majority of total application volume, with the refinance share reaching its highest level in 2011.  As part of legislation to extend the payroll tax holiday, guarantee fees for loans purchased by the GSEs and mortgage insurance premiums for FHA loans will eventually increase.  Given the announced implementation of this change, we do not expect to see an impact on mortgage rates and application activity until at least February," said Michael Fratantoni, MBA's Vice President of Research and Economics.

Average interest rates for the conforming (mortgage balance of $417,500 or less) 30-year fixed-rate mortgages (FRM) during the week ended December 30 was 4.07 percent with 0.53 point. This was the lowest rate for the entire year.  The rate for jumbo 30-year FRM (balances above $417,500) was 4.41 percent with 0.44 points.  Conforming 15-year FRMs carried a rate of 3.37 percent with 0.50 point.

FHA-backed 30-year FRM had an average rate during the last week of the year of 3.96 percent with 0.71 point and the interest rate for 5/1 hybrid adjustable rate mortgages was 2.91 percent with 0.48 point.

All rates quoted are for products with loan-to-value ratios of 80 percent or less and quoted points include the origination fee.

The survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted weekly since 1990.  Respondents include mortgage bankers, commercial banks and thrifts.  Base period and value for all indexes is March 16, 1990=100.