The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications Wednesday morning, noting a decrease of 3.6% in the group’s seasonally adjusted composite index. That followed a rise of 1.9% for the previous week. The prior week’s report was adjusted to account for the July Fourth holiday. Mortgage loan rates increased on three types of loans and decreased on two other types.

The seasonally adjusted purchase index decreased 8% from the prior week’s report. On an unadjusted basis, the composite index increased by 20% week-over-week. The unadjusted purchase index increased by 16% for the week and remains 17% lower year-over-year.

Adjustable rate mortgage loans account for 8% of all applications, unchanged from previous weeks.

The MBA’s refinance index decreased by 0.1%, after rising by the same amount in the previous week. The share of refinancings increased from 52% to 54% of all applications.

The average mortgage loan rate for a conforming 30-year fixed-rate mortgage increased from 4.32% to 4.33%. The rate for a jumbo 30-year fixed-rate mortgage fell from 4.24% to 4.23%. The average interest rate for a 15-year fixed-rate mortgage increased from 3.40% to 3.41%.

The contract interest rate for a 5/1 adjustable rate mortgage loan dropped from 3.24% to 3.17%. Rates on a 30-year FHA-backed fixed rate loan increased from 4.02% to 4.04%.

The mortgage market bounces from small gains to small drops, and that probably has more to do with borrower confidence that mortgage rates. The significant drop in adjustable rate mortgage interest may be a sign that lenders are trying to use the low interest rates to drive up both purchase applications and refinancings.

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