The financial turmoil of August trumped near-record low rates last week as mortgage application volume slipped for both refinancings and home purchases, the Mortgage Bankers Association said Wednesday.

The MBA's Market Composite Index, which measures mortgage application volume, fell 2.4% on a seasonally adjusted basis and 2.9% unadjusted from a week. The Refinance Index dropped 1.7% and the seasonally adjusted Purchase Index decreased 5.7% and landed at the lowest level in the survey since December 1996. The unadjusted Purchase Index decreased 7.3% and was 7.3% lower than the same week one year ago.

"Another week of volatile markets and rampant uncertainty regarding the economy kept prospective homebuyers on the sidelines, with purchase applications falling to a 15-year low," said Mike Fratantoni, MBA's vp/research and economics. "This decline impacted borrowers across the board, with purchase applications for jumbo loans falling by more than 15%, and purchase applications for the government housing programs (FHA, VA, andUSDA) falling by 8.2%. Although mortgage rates remain quite low, they increased over the week, bringing refinance application volumes down slightly."

The four week moving average for the seasonally adjusted Market Index was up6.9 percent, down 2.6% for the seasonally adjusted Purchase Index and up 9.9% for the Refinance Index.

The refinance share increased to 79.8% of total applications from 78.8%, and the adjustable-rate mortgage share of activity increased to 6.2% from 5.8% of total applications from the prior week.

The average rate for 30-year fixed-rate mortgages increased to 4.39% from 4.32%, with points rising to 0.88 from 0.86. The rate for 15-year fixed-rate mortgages increased to 3.56% from 3.47% with points decreasing to 1.00 from 1.08.