The Mortgage Bankers Association (MBA) reported on Wednesday the mortgage application volume in the U.S. decreased 1.2 percent in the week ended December 4, following a 0.6 percent drop in the previous week.

According to the report, applications to purchase a home plunged 5.0 percent, while refinance applications rose 2.0 percent.

Meanwhile, the average fixed 30-year mortgage rate dropped from 2.92 percent to a survey low of 2.90 percent.

“The increase in refinance applications was driven by FHA and VA refinances, while conventional activity fell slightly,” noted Joel Kan, an MBA economist. “The purchase market is also poised to finish 2020 on a strong note. Applications fell slightly last week but were around 3% higher than the two weeks leading up to Thanksgiving. Reversing the recent trend, there was also a shift in the composition of applications, with an increase in government loans pushing the average loan balance lower,” Kan added.