Mortgage applications fell last week, driven lower as fewer homeowners applied to refinance existing loans in the face of higher interest rates, the Mortgage Bankers Association said Wednesday. Applications for purchase mortgages, however, continued to rise.

The MBA's Market Composite Index decreased 0.9%, seasonally adjusted, from the prior week. Unadjusted, the index was up 22.8% owing to the Thanksgiving holiday in the prior week. The Refinance Index decreased 1.4%, its fourth weekly decrease to its lowest level since June 2010.

The seasonally adjusted Purchase Index increased 1.8%, its third weekly increase and its highest level since early May 2010. The unadjusted Purchase Index increased 21.3% compared with the previous week and was 12.0% lower than the same week one year ago.

The four week moving average for the seasonally adjusted Market Index is down 8% but up 2.8% for the seasonally adjusted Purchase Index. The refinance share of mortgage activity increased to 75.2% from 74.9% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.6% from 5.7% of total applications.

The average contract interest rate for 30-year fixed-rate mortgages increased to 4.66% from 4.56%, with points decreasing to 0.95 from 0.96.This was the fourth consecutive weekly increase and it put the rate at it highest level since July 2010.

The rate for 15-year fixed-rate mortgages increased to 3.98% from 3.91%, with points increasing to 0.97 from 0.88. It was the second consecutive weekly increase and the highest level since early September.

David Goldberg, home-building analyst at UBS, took a cautious view of the recent rise in the Purchase Index. "We expect volatility in the index through the spring selling season as our most recent channel checks leave us fearful that an absence of buyers that have the requisite down payment and credit stats might limit any potential bounce."