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US mortgage activity dropped slightly last week despite a notable increase in new home purchase applications, industry data revealed Wednesday morning.
Refinancing demand declined from levels near record highs, causing the Mortgage Bankers Association's Market Composite Index to drop for the first time in six weeks.
Overall mortgage applications decreased 1.5 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 1.9 percent compared with the previous week.
The Refinance Index decreased 3.1 percent from the previous week as interest rates rose modestly from extraordinarily low levels.
At the same time, however, the seasonally adjusted Purchase Index increased 6.3 percent from one week earlier, reaching its highest since the end of May.
Still, purchase activity remains well below levels seen prior to the expiration of the homebuyer tax credit in April, and is almost 40 percent below the level recorded one year ago, according to Michael Fratantoni, MBA's Vice President of Research and Economics.
"On the other hand, refinance volume dropped last week for the first time in six weeks, but the level of applications to refinance remains close to recent highs, as historically low mortgage rates continue to draw borrowers into the market," Fratantoni added.
The average contract interest rate for 30-year fixed-rate mortgages increased to 4.50 percent from 4.43 percent. The 15-year fixed-rate edged higher to 4.00 percent from 3.88 percent.
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