Applications for both home purchase mortgages and refinancing declined last week, pulling overall volume lower for the second week in a row.  The Mortgage Bankers Association (MBA) says that its Market Composite Index, a measure of application volume, was down 2.3 percent on a seasonally adjusted basis during the week ended August 25.  The Index declined 4 percent on an unadjusted basis.

The Refinance Index declined by 2 percent from the previous week although the refinancing share of all applications rose from 48.7 percent to 49.4 percent. The seasonally adjusted Purchase Index decreased 3.0 percent from one week earlier and fell by 5.0 percent on an unadjusted basis compared to the week ended August 19.  Purchase volume has now declined in nine of the last 12 weeks.  The unadjusted Purchase Index was 4.0 percent higher than during the same week in 2016.  

The FHA share of total applications fell to 9.7 percent from 10.1 percent and the USDA's dipped to 0.7 percent from 0.8 percent. The VA share of total applications decreased to 10.0 percent from 10.2 percent the week prior.

Interest rates were mixed on both a contract and an effective basis. The average contract interest rate for 30-year fixed-rate mortgages (FRM) with conforming loan balances of $424,100 or less dipped 1 basis point to the lowest level since November 2016, 4.11 percent.  Points increased to 0.43 from 0.39, leaving the effective rate unchanged.   

Jumbo 30-year FRM, those loans with balances above the conforming loan limit, had an average contract rate of 4.00 percent, up 1 basis point week-over- week.  Points dropped to 0.20 from 0.26 and the effective rate was down.

The average contract interest rate for 30-year FRM backed by the FHA was unchanged at 4.02 percent.  Points rose to 0.41 from 0.37 moving the effective rate higher.

The interest rate for 15-year FRM decreased to its lowest level since November 2016, 3.36 percent, from 3.40 percent, with points remaining at 0.38. The effective rate edged lower.  

Adjustable rate mortgages (ARM) had their highest market share in nearly two months, 6.9 percent, up from 6.4 percent the previous week.  The average contract interest rate for 5/1 ARMs decreased to 3.26 percent from 3.27 percent, with points increasing to 0.35 from 0.31. The effective rate increased.

MBA's Weekly Mortgage Applications Survey has been conducted since 1990 and covers over 75 percent of all 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 and interest rate information is based on loans with an 80 percent loan-to-value ratio and points that include the origination fee.