Applications for home mortgages rose sharply last week, with the Mortgage Bankers Association's Market Composite Index jumping 9.3%, seasonally adjusted, from a week earlier, the MBA said Wednesday.

The gain was driven primarily by refinancings, with the Refinance Index up 11.2% from the previous week. The seasonally adjusted Purchase Index increased 2.6%; unadjusted, it was up 2.2% and up 0.1% from the same week a year ago.

The four-week moving average for the seasonally adjusted Market Index is up 1.96%, down 0.18% for the seasonally adjusted Purchase Index and up 2.6% for the Refinance Index.

"Mortgage rates declined last week, at least partially in response to the Fed's announcement that they would shift their portfolio towards longer-term Treasury securities, and that they would resume buying mortgage-backed securities," said Mike Fratantoni, MBA's vp/research and economics. "With lower rates, refinance application volume increased to its highest level since August 19, 2011. Purchase application volume also increased. However, the increase was in conventional purchase applications, which were up by 4.9%. Purchase applications for government loans fell by 0.6% over the week, likely influenced by the pending decline in FHA loan limits."

The refinance share of mortgage activity increased to 79.7% from 78.3% the previous week, its highest since the survey's re-benchmark in January 2011.The adjustable-rate mortgage (ARM) share decreased to 6.1% percent from 6.7% the previous week.

The average loan size of all loans for home purchase in the US was $212,700 in August 2011, up from $211,200 in July 2011, and $241,300 for refinancings, up from $209,200 in July. The largest purchase loans were made in the Pacific region at $304,800. The largest refinance loans were also made in the Pacific region at $344,500.

The average rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 4.25% from 4.29%, with points decreasing to 0.35 from 0.41 (including the origination fee) for 80 percent loan-to-value (LTV) ratio loans. The rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $417,500) decreased to 4.51% from 4.55%, with points decreasing to 0.38 from 0.46. The rate for 30-year fixed-rate mortgages backed by the FHA decreased to 4.05% from 4.07%, with points decreasing to 0.39 from 0.51. The rate for 15-year fixed-rate mortgages increased to 3.47% from 3.46% with points remaining unchanged from 0.45. The rate on 5/1 ARMs decreased to 2.95% from 2.96% with points decreasing to 0.48 from 0.49.