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NEW YORK (Reuters) - Applications for U.S. home mortgages fell for the second week in a row despite a fall in the 30-year mortgage rate to a 15-month low, an industry group said on Wednesday.

The Mortgage Bankers Association said both refinancing and purchasing mortgage activity dipped in the week ending June 24 after falling substantially in the preceding week.

The MBA said its seasonally adjusted index of mortgage application activity decreased 1.1 percent to 778.4, adding to the previous week's 11.3 percent loss.

The MBA's seasonally adjusted index of refinancing applications dropped 1.8 percent to 2529.2, after falling 13.2 percent the prior week.

The MBA's purchase index, a gauge of loan requests for home purchases, fell 0.4 percent to 477.4, after dropping 9.4 percent the previous week.

Fixed 30-year mortgage rates averaged 5.47 percent last week, excluding fees, down 16 basis points from 5.63 percent the previous week.

"The 30-year fixed mortgage rate declined to its lowest point since March of 2004," Michael Cevarr, MBA's director of member surveys, said in a press release.

The latest sustained decline in rates began last April after the 30-year mortgage rate hit 6.08 percent at the end of March, according to MBA figures.

Interest rates also are much lower than a year ago. The fixed 30-year mortgage rate as of June 25, 2004 was 6.21 percent, according to MBA data.

The MBA also said the average contract interest rate for 15-year fixed-rate mortgages fell 18 basis points last week to 5.06 percent from 5.24 percent a week earlier.

Rates on one-year ARMs fell to 4.42 percent from 4.46 percent the prior week.

Industry analysts and economists have said they expect home sales to edge off record 2004 levels as the Federal Reserve raises interest rates, but demand has not weakened significantly.

The Fed's policy-making arm is meeting on Wednesday and Thursday. The overwhelming consensus among market participants is that the Fed will raise short-term interest rates by another 25 basis points to 3.25 percent at the conclusion of its meeting. The Fed has raised rates eight times since June 2004.

ARM MORTGAGES DOWN

Applications for adjustable-rate mortgages (ARMs) fell to 30 percent of total applications from 30.7 percent the previous week, the MBA said.
The ARM share of applications is at its lowest level since April of 2004, Cevarr said.

Refinancings also decreased as a percentage of all mortgage applications, at 45.4 percent of total applications, from 45.6 percent the previous week.
Recent data on the U.S. housing sector showed that the market is vigorous, with home building and sales remaining at robust levels.

The MBA's survey covers approximately 50 percent of all U.S. retail residential mortgage originations. It has been conducted weekly since 1990.

Respondents include mortgage bankers, commercial banks and thrifts.