The Mortgage Bankers Association's Market Composite Index, a measure of loan application volume based on surveys of the trade group's members, rose a seasonally adjusted 0.9% for the weekly period ending June 14. Borrowing activity decelerated, though, from the prior week's 15.6% surge. On a year-over-year basis, the index came in flat, with growth of 0.3%. 

The lowest interest rates in over two months helped nudge volumes to a weekly gain. The conforming 30-year fixed rate among MBA lenders fell 8 basis points to 6.94% from 7.02%. Balances below the conforming amount make them eligible for sale to the government-sponsored enterprises.  

Meanwhile, points used to help buy down the 30-year rate edged down to 0.61 from 0.65 for 80% loan-to-value ratio applications. 

The downward rate trend came the same week as inflation data and the latest Federal Open Market Committee meeting both pointed to possible relief for borrowers later this year. Post-meeting sentiment likely helped bring some buyers to the borrowing table, with the seasonally adjusted Purchase Index increasing 1.6% from the previous weekly survey. Activity slowed, though, from the 8.6% jump reported seven days earlier. 

"Purchase applications increased a small amount for the week, led by applications for conventional loans," said Mike Fratantoni, MBA senior vice president and chief economist, in a press release. 

Despite higher levels for purchases two weeks in a row, the number of applications declined 11.8% from a year ago, "but MBA is forecasting a pickup in home sales for the remainder of the year as more inventory is hitting the market," Fratantoni said.

Lenders and sellers would welcome the activity, but recent signs of a pick-up in housing supply has, as of yet, not resulted in sustained sales growth or lower prices across the country. In May, the housing market saw one of the slowest months for sales in the past decade, according to Redfin. Data at the real estate brokerage showed only two other months with fewer sales.  

"Sales are sluggish because high home buying costs are making both house hunters and prospective sellers skittish," said Redfin senior economist Elijah de la Campa. "And with so few homes for sale, buyers in some markets are getting into bidding wars, which is helping push home prices to record highs."

The trends mean some homes are currently sitting on the market for weeks longer than they were just a year or two ago. The median length of time properties stayed on the market in May was 32 days, Redfin said. 

While purchase applications squeezed out a gain last week, the MBA's Refinance Index slipped 0.4%, coming off a 28.4% leap seven days earlier. But refinance application volumes were still 30% higher from a year ago, when a majority of homeowners held loans with interest rates below levels at the time. 

The share of refinances relative to overall activity was unchanged at 35.2%. Adjustable-rate mortgages for purchases and refinances garnered 6% of all applications, dropping from 6.3% the previous week. Borrowers typically show less interest in ARMs when fixed rates fall..

While federally sponsored lending helped drive activity a week earlier, applications flattened in the latest survey. The seasonally adjusted Government Index ticked up 0.1%, while overall share declined.

Federal Housing Administration-guaranteed mortgages saw a smaller share 12.7% of activity compared to the previous week's 13.1%. But applications backed by the Department of Veterans Affairs nabbed 14.8%, up from 14.7%, while loans coming through the U.S. Department of Agriculture made up the same 0.4% slice from the week prior.