The Mortgage Bankers Association (MBS) has released its Weekly Mortgage Applications Survey for the week ending September 2, 2011.  MBA's seasonally adjusted Market Composite Index, a measure of loan application volume, was down for the third consecutive week, decreasing 4.9 percent from the Index during the week ended August 236.  On an unadjusted basis the Index was down 5.3 percent.

The Refinancing Index decreased 6.3 percent from one week ago while the seasonally adjusted Purchase Index inched up 0.2 percent.  The unadjusted  Purchase Index, however, was down 2.1 percent from the previous week and was 13.5 percent lower than one week earlier.

"Heading into the Labor Day weekend, the 30-year rate was at its second lowest level in the history of our survey (the low point was reached last October), and the 15-year rate marked a new low in our survey," said Mike Fratantoni, MBA's Vice President of Research and Economics. "Despite these rates however, refinance application volume fell for the third straight week, and is more than 35 percent below levels at this time last year. Purchase application volume remains relatively flat at extremely low levels, close to lows last seen in 1996."

All three of the moving averages were down from the previous week.  The seasonally adjusted Market Index and Purchase Index were lost 3.2 percent and 3.7 percent respectively; the Refinance Index declined 3.1 percent.

The refinance share of mortgage activity fell for the second week in a row from a record 79.8 percent during the week ended August 19.  The share last week was 77.8 percent, this week it is 77.1 percent of total applications. Adjustable rate mortgages (ARMs) garnered a 7.1 percent share of mortgage volume, essentially unchanged from the previous week.

The average contract interest rate for 30-year fixed-rate mortgages (FRM) decreased to 4.23 percent from 4.32 percent with points, including the origination fee, decreasing from 1.29 points to 1.04.  This is the second lowest rate in the history of the survey.  The contract rate for 15-year FRMs was down from 3.49 percent with 1.0 point to 3.41 percent with 0.94 point.  The effective rate of both types of loans also decreased.  All quotes are for 80 percent loan-to-value ratio mortgages.

MBA's survey covers over 50 percent of U.S. retail residential mortgage applications. Respondents include mortgage bankers, commercial banks and thrifts.  Base period and value for all indexes is March 16, 1990=100.