NEW YORK - Mortgage applications decreased 2.9% in the week ended Jan. 27, according to data from the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.

The refinance index decreased 3.6%, and the purchase index increased 17.1%.

The four week moving average for the seasonally adjusted market index is up 4.11%. The four week moving average is up 2.48% for the seasonally adjusted purchase index, while this average is up 4.22% for the refinance index.

The refinance share of mortgage activity decreased to 80.0% of total applications from 81.3% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.6% from 5.3% of total applications from the previous week.

"The Federal Reserve surprised the market last week by indicating that short-term rates were likely to stay at their current low-levels until the end of 2014. Longer-term treasury rates dropped in response, and mortgage rates for the week were down slightly as a result," said Michael Fratantoni, MBA's Vice President of Research and Economics. Fratantoni continued, "Although total application volume dropped on an adjusted basis relative to last week, refinance volume remains high, with survey participants reporting that the expanded Home Affordable Refinance Program (HARP) contributed to roughly 10 percent of their refinance activity."

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 4.09% from 4.11%.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 3.36% from 3.40%.

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