Mortgage applications decreased 2.0 percent from one week earlier, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey for the week ending August 28, 2020.

The Market Composite Index, a measure of mortgage loan application volume, decreased 2.0 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 3 percent compared with the previous week. The Refinance Index decreased 3 percent from the previous week and was 40 percent higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 0.2 percent from one week earlier. The unadjusted Purchase Index decreased 3 percent compared with the previous week and was 28 percent higher than the same week one year ago.

"Both conventional and government refinancing activity decreased last week, despite 30-year fixed and 15-year fixed mortgage rates declining to near historical lows. Mortgage rates have remained below 3.5 percent for five months now, and it's possible that refinance demand may be slowing and will not significantly increase again without another notable drop in rates," said Joel Kan, MBA's Associate Vice President of Economic and Industry Forecasting. "Purchase applications were essentially unchanged over the week and were 28 percent higher than a year ago - the 15th straight week of year-over-year increases. Lenders are reporting that the strong demand for homebuying is coming from delayed activity from the spring, as well as households seeking more space in less densely populated areas."

The refinance share of mortgage activity decreased to 62.5 percent of total applications from 62.6 percent the previous week. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 2.6 percent of total applications.

The FHA share of total applications decreased to 10.2 percent from 10.5 percent the week prior. The VA share of total applications decreased to 11.4 percent from 11.8 percent the week prior. The USDA share of total applications remained unchanged from 0.6 percent the week prior.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($510,400 or less) decreased to 3.08 percent from 3.11 percent, with points decreasing to 0.36 from 0.38 (including the origination fee) for 80 percent loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $510,400) remained unchanged at 3.41 percent, with points increasing to 0.38 from 0.35 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 3.19 percent from 3.16 percent, with points increasing to 0.34 from 0.29 (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 2.67 percent from 2.70 percent, with points decreasing to 0.36 from 0.39 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 3.08 percent from 3.14 percent, with points increasing to 0.43 from 0.42 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.