Mortgage applications as measured by the Mortgage Bankers Association's Market Composite Index fell 5% last week on a seasonally adjusted basis from a week earlier, the group reported Wednesday. Unadjusted basis, the index decreased 4.9%.

The Refinance Index dropped 5.5% from the previous week; the seasonally adjusted Purchase Index decreased 3.8% from one week earlier and the unadjusted Purchase Index decreased 3.4% but was 2.2% higher than the same comparable week a year earlier.

The four week moving average for the seasonally adjusted Market Index was down 0.3%. The four week moving average was down 0.5% for the seasonally adjusted Purchase Index and down 0.3% for the Refinance Index.

The refinance share of mortgage activity decreased to 69.6% of total applications from 70.1% the previous week. The adjustable-rate mortgage(ARM) share of activity increased to 6.1% from 5.8%.

The average rate for 30-year fixed-rate mortgages increased to 4.57% from 4.54%, with points increasing to 1.14 from 0.98. The rate for 15-year fixed-rate mortgages increased to 3.67% from 3.66%, with points increasing to 1.08 from 0.97.

In a note to investors, David Goldberg at UBS wrote, "The index has been range bound at historically low levels for most of this year. We believe this reflects the impact of: 1) tighter underwriting standards, which is reducing the pool of potential buyers; and 2) weak buyer confidence around home prices. In turn, we remain cautious awaiting better entry points."