"Mortgage application activity was muted last week despite slightly lower mortgage rates," noted Joel Kan, MBA vice president and deputy chief economist, in a press release. 

The 30-year conforming fixed-rate average for mortgages with balances below $766,550 in most markets, slid 4 basis points to 6.93% from 6.97% the previous week. Borrower points used to buy down the rate also dropped by 4 basis points to 0.6 from 0.64 for 80% loan-to-value ratio applications.

Kan attributed much of the week's sluggishness to consumer hesitancy in an unpredictable economic environment. "Purchase applications were essentially unchanged, as homebuyers continue to hold out for lower mortgage rates and for more listings to hit the market," he said.

As a result, the seasonally adjusted Purchase Index also edged down by 0.2% from the prior survey period. But compared to the same week a year ago, volumes were 15.6% lower, with the housing market still feeling the impact of the lock-in effect discouraging homeowners from moving and taking on mortgage rates well above what they currently have.

But recent measures of inventory and prices show movements that could hint at some degree of relief for homebuyers if trends continue. In mid March, online real estate brokerage Redfin saw a 5% uptick in new listings over the previous four-week period, the largest in 10 months. And both Corelogic Case-Shiller and Federal Housing Finance Agency home price indexes recorded small monthly declines earlier this winter. 

Meanwhile, hopes for interest rate reductions are still on the table after last week's Federal Open Market Committee meeting, even if they are unlikely to arrive neither as soon nor as often as many predicted a few months ago. But comments from Federal Reserve Chair Jerome Powell suggesting the possibility of eventual cuts in the federal funds rate seemed to calm investors and dampened the upward surge seen earlier this month.

"Lower rates should help to free up additional inventory as the lock-in effect is reduced, but we expect that will only take place gradually, as we forecast that rates will move toward 6% by the end of the year," Kan said.

The MBA's Refinance Index saw a 1.6% drop-off week over week. Compared to year-ago levels, the index was also 8.6% lower. The share of refinance applications relative to total volume slipped to 30.8% from 31.2%.

"With rates remaining elevated, there is very little incentive right now for rate/term refinances," Kan said.

Seasonally adjusted government-sponsored volumes saw similar-sized downturns as the overall market, leading their share of activity to also remain near their prior-week levels. Both Federal Housing Administration- and Department of Veterans Affairs-guaranteed loans garnered 12% of total volume each after accounting for 12.1% shares seven days earlier. Applications coming from U.S. Department of Agriculture programs took the same 0.5% portion as well. 

After rising in the prior survey following reports of higher-than-expected February inflation, fixed interest rates leveled off or fell among MBA lenders. The contract average of the 30-year jumbo mortgage for loans with balances above the conforming limit stayed at 7.14% week over week. Points fell, though, to 0.38 from 0.54 for 80% LTV-ratio loans.

The FHA-backed 30-year fixed-rate average tumbled 14 basis points to 6.75% from 6.89% in the previous survey period. Borrower points decreased to 0.97 from 1.04.

The contract rate for the 15-year fixed mortgage dropped by 3 basis points to average 6.46%, compared to 6.49% seven days prior. But unlike other fixed-rate loans, points increased, rising to 0.75 from 0.7. 

The average of the 5/1 adjustable-rate mortgage, which begins fixed for a 60-month term, also finished lower last week, taking a 6 basis point drop to 6.27% from 6.33%. Borrowers typically used 0.64 worth of points compared to 0.55 in the previous weekly survey. 

Adjustable-rate mortgages of all types comprised 7% of overall activity, falling from 7.2% seven days earlier.