Mortgage applications decreased 4.2 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 12, 2012.  This week’s results include an adjustment to account for the Columbus Day holiday.

The Market Composite Index, a measure of mortgage loan application volume, decreased 4.2 percent on a seasonally adjusted basis from one week earlier.  On an unadjusted basis, the Index decreased 14 percent compared with the previous week.  The Refinance Index decreased 5 percent from the previous week.  The seasonally adjusted Purchase Index increased 1 percent from one week earlier. This is the highest Purchase Index observed in the survey since early June 2012.  The unadjusted Purchase Index decreased 9 percent compared with the previous week and was 12 percent higher than the same week one year ago.

The refinance share of mortgage activity decreased to 82 percent of total applications from 83 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained constant at 4 percent of total applications.  The HARP share of refinance applications increased to 22 percent from 18 percent the prior week.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) increased to 3.57 percent from 3.56 percent, with points increasing to 0.44 from  0.39 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans.  The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) increased to 3.81 percent from 3.74 percent, with points increasing to 0.42 from 0.40 (including the origination fee) for 80 percent LTV loans.  The effective rate increased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA remained constant at 3.34 percent, with points increasing to 0.82 from 0.71 (including the origination fee) for 80 percent LTV loans.  The effective rate increased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 2.87 percent from 2.88 percent, with points decreasing to 0.39 from 0.40 (including the origination fee) for 80 percent LTV loans. The 15-year contract rate has decreased for eight consecutive weeks and is a new record low in the survey. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 2.59 percent from 2.60 percent, with points decreasing to 0.35 from 0.36 (including the origination fee) for 80 percent LTV loans.  The contract rate matched the lowest rate in the series. The effective rate decreased from last week.