While applications for purchase mortgages rose slightly during the week ended August 24 it wasn't enough to compensate for the drop in refinancing applications.  The Mortgage Bankers Association's (MBA) Market Composite Index, a measure of loan application volume during the week, was down a seasonally adjusted 4.3 percent from one week earlier and 5 percent on an unadjusted basis.

The decrease was driven by a 6 percent drop in the Refinance Index to the lowest level since early May.  The seasonally adjusted Purchase Index rose 1 percent from the week ended August 17 but was down 1 percent adjusted.  Refinancing made up 79 percent of loan applications compared to 80 percent the previous week.

Purchase Index vs 30 Yr Fixed

Refinance Index vs 30 Yr Fixed

All interest rates, both contract and effective, were down from a week earlier. The average contract rate for 30-year fixed-rate mortgages (FRM) with conforming balances of $417,500 or less was 3.80 percent compared to 3.86 percent the previous week.  Points were unchanged at 0.42.  The jumbo 30-year FRM (loans balances over $417,500) decreased to 4.06 percent with 0.34 point from 4.11 percent with 0.42 point.

FHA-backed 30-year FRM had an average rate of 3.60 percent with 0.48 point.  Both rate and points were two basis points lower than the previous week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.12 percent from 3.15 percent, with points remaining unchanged at 0.44

Applications for adjustable rate mortgages (ARMs) had a 4 percent share of the market during the week.  The rate for 5/l hybrid adjustable mortgages fell from 2.74 percent with 0.38 point to 2.68 percent with 0.36 point, the lowest rate for this type of loan since MBA began to track it.

All rates quoted by MBA are for loans with an 80 percent loan-to-value ratio and points include the origination fee.  Rates are derived from a weekly survey of mortgage bankers, commercial banks and thrifts which has been conducted since 1990.  The survey covers over 75 percent of all U.S. retail residential mortgage applications.  Base period and value for all indexes is March 16, 1990=100.