Mortgage applications were little changed in the past seven days — a 1.2% decrease brought the Market Composite Index down to 624.6, according to the Mortgage Bankers Association of America, or MBA. While there was a 2.2% increase week-to-week in the Purchase Index, the Refinance Index fell by 6.6%, marking one full month of descending refinance applications.

Both the refinance share and the adjustable-rate mortgage share of mortgage activity edged down from last week and each comprise over a third of total applications, or 34.3% and 33.9%, respectively, MBA said.

In the year’s first quarter, the refinance share of mortgage applications averaged out to 59%, according to Freddie Mac’s latest Conventional Mortgage Home Price Index report released Wednesday. The secondary lender said that it anticipates the share in the fourth quarter will drop to 34% and average out to 43% for the year.

The falloff in refinance activity will reduce the amount of equity cashed out of homes in 2004 to roughly $114 billion, below last year’s $139 billion, according to the report.

Freddie said the first three months of 2004 marked the 30th quarter in which every region of the country experienced positive changes in home prices, and that it expects a new record of 7.3 million new and existing sales to be reached in 2004, up from last year’s 7.2 million. Due to the strong sales numbers and rising home prices, purchase mortgage originations will reportedly set a new record in 2004.

Waning applications have been triggered by rising rates — the 30-year fixed-rate mortgage bottomed out in March at 5.4% and went into the 6% range the last week of April, according to Freddie Mac. Currently, the 30-year fixed-rate mortgage average is 6.28%, which is 4 basis points (BPS) lower than last week, and the 15-year dropped 6 BPS to 5.63%.

Back up to levels not seen since last January, the 1-year Treasury-indexed adjustable-rate mortgage (ARM) averaged 3.98% — climbing 11 BPS in the past seven days, the mortgage giant reported.

At this time last year, Freddie said the 30-year stood at 5.26%, the 15-year at 4.66%, and the 1-year ARM averaged 3.59%. In accordance with the lower rates, MBA reported at the time that the Market Composite Index had hit a record high — standing almost three times higher than its current level.

“Financial markets are in limbo at the moment, waiting primarily on tomorrow’s jobs report for an indication that the growth in the economy is sustainable,” said Freddie’s chief economist Frank Nothaft in a statement. “We had two months of really strong job increases and a third month would reassure markets and be a stabilizing factor.”

Bankrate.com’s surveyed panel of mortgage bankers, brokers and other industry individuals was also in a state of limbo — only 25% forecasted a downturn in rates over the next month and a half, but the rest were evenly divided (37.5% each) on whether rates would rise or stay about the same (plus or minus 2 BPS).

In afternoon trading Thursday, the 10-year Treasury note had a 4.71% yield and price of 100 8/32. At the market’s close a week ago, the figures were 4.60% and 101 5/32.