The housing market continues to struggle as home prices fall and mortgage applications drop. The Market Composite Index, which measures the volume of mortgage applications each week, dropped this past week. One of the biggest reasons is the fact that the refinancing portion of the index dropped.

Apparently, even though mortgage rates are low, people are reluctant to refinance their homes. This is causing mortgage applications to drop. Perhaps some are waiting to see if mortgage interest rates will drop back below 5%, since mortgage rates rose last week. Another issue is that home values have not been rising, and do get the 80% loan to value ration that many mortgage lenders are asking for is difficult.

Those with mortgages serviced by Fannie Mae or Freddie Mac, though, can take advantage of a refinance program from the government that allows a 125% LTV.