Mortgage activity fell during the week of April 2 as rates on the benchmark 30-year fixed loan jumped to an average of 5.31%, the highest it has been since August of 2009, the Mortgage Bankers Association said Wednesday. The decline, however, was concentrated in refinance loans.

Separately, the MBA reported the results of a study that estimated 1.2 million households were lost during the recession despite a population increase of 3.4 million among the study's universe. The study, entitled "What Happens to Household Formation in a Recession," was conducted by USC Professor Gary Painter examining data over 40 years through 2008. The MBA surmised that the drop in households is a factor in the excess supply of homes on the market and of vacant apartments.

In the weekly mortgage summary, the MBA's Market Composite Index, which measures mortgage application volume, dropped 11% on a seasonally adjusted basis last week from a week earlier. The Refinance Index decreased 16.9% from the previous week and the seasonally adjusted Purchase Index increased 0.2% from one week earlier.

"Mortgage rates jumped last week as the Federal Reserve completed their purchases of mortgage-backed securities," said Michael Fratantoni, MBA¹s vp of research and economics.

The unadjusted Purchase Index increased 0.5% compared with the previous week but was 18.1% lower than the same week one year ago. The government purchase index increased significantly for the third straight week and as a result, the government share of purchase applications increased to 49.9%, its highest level since February 1990 and the third highest level in the history of the data.

The four week moving average for the seasonally adjusted Market Index was down 3.8%, but the four week moving average for the Purchase Index was up3.2 and down 6.9% for the Refinance Index. The refinance share of mortgage activity decreased to 58.7% of total applications from 63.2% the previous week, marking the lowest share observed in the survey since the week ending August 28, 2009.

Not surprisingly, the adjustable-rate mortgage (ARM) share of activity increased to 6.2% from 5.2%.

The average contract interest rate for 30-year fixed-rate mortgages increased to 5.31% from 5.04%, with points decreasing to 0.64 from 1.07 (including the origination fee) for 80% loan-to-value (LTV) ratio loans. Rates on 15-year fixed-rate mortgages increased to 4.54% from 4.34%, with points decreasing to 0.92 from 0.98 (including the origination fee) for 80% LTV loans. ARMs increased to 7.03% from 6.88%, with points decreasing to 0.29 from 0.31 for 80% LTV loans.