According to The Mortgage Bankers Association’s Weekly Applications Survey, purchase and refinance applications both dropped last week, even after adjustments made for the Memorial Day holiday. The Refinance Index fell 14.3 percent, while purchase demand was down 5.7 percent. Still, the average contract interest rate for a 30-year fixed-rate mortgage was 4.81 percent, down from 4.83 percent the week before. Michael Frantantoni, MBA’s vice president of research and economics, said that buyers have yet to return to the market following the expiration of the tax credit and believes the number of homeowners that have already refinanced or remain underwater on their mortgages helps explain the drop in refinance activity despite historically low rates. More here and here.