Mortgage refinance applications across the country decreased for the second week in a row, according to data from the Mortgage Bankers Association’s Weekly Mortgage Applications Survey for the week ending Aug.14.

Overall, application volume dropped 3.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the volume decreased 4 percent compared with the previous week, the MBA said. Refinance applications dropped 5 percent from the previous week but were still 38 percent higher than the same week one year ago. The volume of purchase mortgage applications increased 1 percent from one week earlier on a seasonally adjusted basis and decreased 1 percent on an unadjusted basis. The number of purchase applications were 27 percent higher than the same week one year ago.

“Positive economic data reported last week on retail sales, as well as a large U.S. Treasury auction, drove mortgage rates to their highest level in two weeks. The rise in rates dampened refinance activity, but purchase applications continued their strong run and were 27 percent higher than a year ago – the third straight month of year-over-year increases,” MBA Associate Vice President of Economic and Industry Forecasting Joel Kan said in a statement. “Conventional purchase applications drove last week’s increase, while applications for government loans decreased. The housing market remains a bright spot in the current economic recovery and these results, combined with July data on housing starts and homebuilder optimism, suggest that housing supply could be increasing to better meet the strong demand for buying a home.”

If interest rates remain close to current levels, plans announced Aug. 12 by Fannie Mae and Freddie Mac to charge a 0.5 percent “adverse market fee” on all mortgage refinance transactions may also dampen future consumer enthusiasm for refinances. The American Bankers Association estimates the fee, intended to hedge against mortgage market uncertainty as both GSEs look to exit conservatorship, will cost the average consumer $1,400.

“The pricing increase is particularly harmful for our nation’s low- and moderate-income homeowners and for the emerging, but unsteady improvements to the national economy,” a statement from coalition of industry and consumer advocacy groups said. “The undersigned organizations strongly urge the Federal Housing Finance Agency, which had to approve this policy, to withdraw this ill-timed, misguided directive.”

The coalition includes: the American Bankers Association, the Center for Responsible Lending, the Credit Union National Association, the Independent Community Bankers of America, the Mortgage Bankers Association, the National Association of Home Builders, the National Association of Real Estate Brokers, the National Association of Realtors and the National Fair Housing Alliance, among others.

Other highlights from the MBA’s most recent survey:

• The refinance share of mortgage activity decreased to 64.6 percent of total applications from 65.7 percent the previous week. The adjustable-rate mortgage share of activity remained unchanged at 2.7 percent of total applications.
• The FHA share of total applications decreased to 10.3 percent from 10.4 percent the week prior. The VA share of total applications decreased to 11.2 percent from 11.4 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) increased to 3.13 percent from 3.06 percent, with points increasing to 0.36 from 0.33 (including the origination fee) for 80 percent loan-to-value ratio 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 $510,400) increased to 3.41 percent from 3.40 percent, with points increasing to 0.35 from 0.31 (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 decreased to 3.16 percent from 3.23 percent, with points decreasing to 0.27 from 0.33 (including the origination fee) for 80 percent LTV loans. The effective rate decreased from last week.
• The average contract interest rate for 15-year fixed-rate mortgages increased to 2.73 percent from 2.67 percent, with points increasing to 0.36 from 0.35 (including the origination fee) for 80 percent LTV loans. The effective rate increased from last week.
• The average contract interest rate for 5/1 ARMs decreased to 2.95 percent from 3.00 percent, with points increasing to 0.41 from 0.30 (including the origination fee) for 80 percent LTV loans. The effective rate remained unchanged from last week.