Despite lower interest rates the volume of loan applications decreased during the week ended August 9 The Mortgage Bankers Association (MBA) said that its Market Composite Index which measures application activity, was down 4.7 percent on a seasonally adjusted basis from the previous week and 5 percent on an unadjusted basis.

Applications for refinancing decreased by 4 percent. Refinancing represented 63 percent of the week's business, the same as the week before and 35 percent of refinancing applications were for the Home Affordable Refinance Program (HARP), down from 36 percent during the week ended August 2.

Refinance Index vs 30 Yr Fixed

The seasonally adjusted Purchase Index decreased 5 percent and the unadjusted index was down 6 percent from the previous week but the unadjusted index was 4 percent higher than during the same week in 2012. MBA said the government share of purchase applications was 29 percent, well below the 38 percent long term average of the series.

Purchase Index vs 30 Yr Fixed

Both contract and effective rates decreased during the week. The average contract rate for a 30-year fixed-rate mortgage (FRM) with a conforming balance of $417,500 or less decreased from 4.61 percent with 0.42 point to 4.56 percent with 0.39 point while the jumbo version (balances over $417,00) averaged 4.57 percent with 0.25 point compared to 4.64 percent with 0.34 point the previous week.

FHA-backed 30-year FRM had an average rate of 4.25 percent, down from 4.33 percent and points increased from 0.26 to 0.30. Interest rates for 15-year FRM averaged 3.60 percent with 0.35 point, down from 3.66 percent with 0.43 point.

Applications for adjustable-rate mortgages (ARM) picked up slightly during the week and represented 6 percent of the total. The average contract interest rate for 5/1 ARMs decreased to 3.36 percent from 3.39 percent,with points unchanged at 0.37.

Interest rates are quoted for loans with an 80 percent loan-to-value ratio. Points include the origination fee.

MBA's Weekly Mortgage Application Survey covers over 75 percent of all U.S. retail residential mortgage applications, and has been conducted since 1990. Survey respondents include mortgage bankers, commercial banks and thrifts. Base period and value for all indexes is March 16, 1990=100.