Mortgage application volume decreased 2.6% in the week ended Dec. 16 despite mortgage rates again dropping to year lows, according to data from the Mortgage Bankers Association’s weekly mortgage applications survey.

“Continued anxiety surrounding the fragile economic situation in Europe led interest rates lower last week. However, refinance applications fell slightly, and purchase applications dropped further as we head into the end of the year,” said MBA vice president of research and economics Michael Fratantoni.

“Remarkably low rates are not enough, as many homeowners continue to hold back due to lack of equity in their properties, poor credit and a weak job market.”

Consumers paid 4.08% interest on an average 30-year fixed-rate mortgage, down from 4.12% last week, while 15-year fixed-rate mortgages decreased to 3.39%. The rates are the lowest seen this year.

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