Mortgage applications dropped 1.2% in the week ended Oct. 5, according to data from the Mortgage Bankers Association's weekly mortgage applications survey, as refinances declined 2% and purchases were up 2%.

"Refinance applications declined somewhat last week although volume is still near three-year highs, and purchase applications increased to the highest level since June, with both conventional and government volumes increasing," said Mike Fratantoni, MBA's vice president of research and economics. "Rates on 30-year fixed-rate loans remain historically low, benefitting both prospective homebuyers and those seeking to refinance."

The refinance share of mortgage activity remained 83.0%, while adjustable-rate mortgages' share of activity decreased to 3.9%, matching its lowest level since December 2009.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) increased to 3.56% from 3.53%, while the average 15-year fixed-rate mortgage decreased to 2.88%, its lowest rate in the history of the survey, from 2.90%.

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