NEW YORK - June 17, 2009 - Mortgage application volume fell for the fourth consecutive week, fueled by a drop off in demand for refinancing.

The MBA market index slid 15.8 percent on a seasonally adjusted basis (-15.8 percent unadjusted) for the week ending June 12 compared to one week earlier, and was up just 0.3 percent compared to a year ago.

The decline was led by a 23.3 percent decrease in refinance applications, though purchases also slipped 3.5 percent from one week earlier.

That pushed the refinance share of mortgage activity to just 54.1 percent of total applications, down from 59.4 percent a week earlier.

Interestingly, interest rates actually improved slightly during the week, but it clearly wasn’t enough to buoy activity.

The popular 30-year fixed averaged 5.50 percent, down from 5.57 percent, while the 15-year fixed dropped to 4.99 percent from 5.10 percent.

The one-year ARM displayed the most downward movement, falling to 6.54 percent from 6.75 percent.

That pushed the adjustable-rate mortgage share of activity to 4.3 percent of total applications, up from 3.4 percent a week prior.

Clearly the record low mortgage rates were the only thing keeping mortgage activity from falling off a cliff.

And if rates don’t make their way back down, all those estimates about 2009 being a banner year for loan originations will be grossly inaccurate.