U.S. mortgage applications dropped last week

NEW YORK (Reuters) - Applications for U.S. home mortgages tumbled last week as demand for refinancing slumped for a second week in a row, though new purchase activity edged up, an industry group said on Thursday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 6.7 percent in the week ended June 29.

The MBA's seasonally adjusted index of refinancing applications slumped 8.4 percent, after a more than 8 percent drop the previous week. The gauge of loan requests for home purchases, a leading indicator of home sales, improved modestly, up 0.6 percent.

The refinance share of total mortgage activity slipped to 78 percent of applications from over 79 percent the week before.

Fixed 30-year mortgage rates averaged 3.86 percent, down 2 basis points from 3.88 percent. It was yet another record low.

The survey covers over 75 percent of U.S. retail residential mortgage applications, according to MBA.

(Reporting By Leah Schnurr; Editing by Leslie Adler)