By Amy Hoak

RISMEDIA, August 30, 2007-(MarketWatch)-The number of mortgage applications filed last week slipped 4.0% from the previous week, while the average interest rate on one-year adjustable-rate mortgages shot up, the Mortgage Bankers Association said Wednesday.

Also on a seasonally adjusted basis, applications for mortgages to purchase homes were down 4.0% on a week-to-week basis, according to the group’s latest survey. And applications for loans to refinance existing mortgages were down 4.2% in the week ended Aug. 24.

The four-week moving average for all loans was up 0.3%.

Compared with the same week in 2006, the volume of applications rose an unadjusted 10.6%, the MBA’s data showed.

Refinancing activity increased last week, accounting for 40.4% of all mortgage applications, compared with 39.9% the week before. Adjustable-rate mortgages decreased to 15.0% last week, down from 18.6%.

While interest rates on fixed-rate loans in the survey decreased, the rate on one-year ARMs increased significantly, climbing to 6.51% from 5.84% the previous week.
Average interest rates on 30- and 15-year fixed-rate mortgages were 6.41% and 6.10%, respectively, down from the prior week’s 6.49% and 6.20%.

The MBA’s weekly surveys cover roughly half of all U.S. retail residential mortgage originations.

Amy Hoak is a MarketWatch reporter based in Chicago.