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NEW YORK, March 29 (Reuters) - U.S. mortgage application activity decreased for a second week, retreating further from a near four-month peak, even as borrowing costs fell sharply in step with bond yields, Mortgage Bankers Association data released on Wednesday showed.
The industry group said its measure on mortgage applications dipped 0.8 percent to 403.6 in the week ended March 24. Two weeks ago, it was 418.1, which was the highest level since 460.30 in the week ended Nov. 18.
Average interest rates on 30-year, fixed-rate conforming mortgages, the most widely held type of U.S. home loan, dropped to 4.33 percent from 4.46 percent, which was the highest level since April 2014. The size of the drop was the biggest since the first week of January.
Conforming loans are those with balances of $424,100 or less and that qualify for guarantees from federal mortgage agencies Fannie Mae and Freddie Mac.
Benchmark U.S. Treasury yields fell last week on doubts that U.S. President Donald Trump and the Republican-controlled Congress can deliver tax cuts and infrastructure spending Wall Street had hoped for.
U.S. 10-year Treasury yield hit a near one-month low at 2.348 percent on Monday after House of Representatives Speaker Paul Ryan on Friday shelved a bill to overhaul the Affordable Care Act, also known as Obamacare, when there was not enough votes to pass it.
Mortgage rates on other home loans that the MBA tracks fell from the preceding week. The average 30-year rate on loans backed by the Federal Housing Administration fell to 4.24 percent from last week's 4.33 percent, which was the highest since January 2014.
The group's seasonally adjusted gauge of applications to refinance an existing home loan fell 2.9 percent to 1,327.1.
The share of refinancing applications declined to 44.0 percent, its smallest since October 2008 from 45.1 percent the prior week, MBA said.
On the other hand, the MBA's seasonally adjusted gauge of purchase application activity, a proxy for future home sales, edged up 1.2 percent to 238.1.
The share of applications for adjustable-rate mortgages contracted to 8.5 percent from last week's 9.0 percent, which was the largest since October 2014.
Reporting by Richard Leong; Editing by Alistair Bell