Applications for new mortgages fell 5.4% for the week ending July 1 compared to a week earlier, according to data from the Mortgage Bankers Association.

The Market Composite index is a measure of mortgage loan application volume. A separate index tracking refinance activity decreased 8% over the same period.

“Mortgage rates decreased for the second week in a row, as growing concerns over an economic slowdown and increased recessionary risks kept Treasury yields lower,” said Joel Kan, associate vice president of economic and industry forecasting for MBA.

He noted mortgage rates have increased sharply in 2022, despite falling 24 basis points in late June, with a 30-year fixed mortgage hovering at 5.74%.

“Rates are still significantly higher than they were a year ago, which is why applications for home purchases and refinances remain depressed. Purchase activity is hamstrung by ongoing affordability challenges and low inventory, and homeowners still have reduced incentive to apply for a refinance.”

Refinance activity as a share of overall mortgage activity decreased to 29.6%, from 30.3%, MBA said. Adjustable-rate mortgages decreased to 9.5% of all applications.

The average interest rate for a 30-year rate on a conforming loan with balances of $647,200 or less decreased to 5.74%, and to 5.6% for loans over that amount.

The average interest rate for 30-year loans backed by the FHA decreased to 5.6%.

Interest rates for 15-year fix-rate mortgages decreased to 4.96% and for 5/1 ARMs it fell to 4.62%.