Mortgage loan applications rose 4.9% on a seasonally adjusted basis in the week ended Aug. 20, and grew 4.5% on an unadjusted basis, as refinancings increased as mortgage rates fell, the Mortgage Bankers Association (MBA) reported Wednesday.

The refinance index increased 5.7% in the week and is at its highest level since May 1, 2009.

The seasonally adjusted purchase index rose 0.6%, while the unadjusted purchase index fell1.1% in the week and dropped 38.8% from the same week one year ago.

"The volume of refi applications last week was up 26% over their level four weeks ago. Mortgage rates dropped to their lowest level in the survey, going back to 1990, as incoming data continue to indicate that economic growth has slowed," said Michael Fratantoni, MBA's vice president of research and economics. "We are at a new 15 month high for the refinance index. With rates this low, many borrowers who refinanced in the past two years may well have an incentive to refinance again, and this is likely increasing refi application activity."

The four-week moving average for the seasonally adjusted market index grew 5.0%, while the four-week moving average on the seasonally adjusted purchase index slid 0.3%, and the refinance index four-week moving average increased 6.2%.

Refinances accounted for 82.4% of total applications, up from 81.4% the previous week, while adjustable-rate mortgages totaled 5.8% of applications, up from 5.7% last week.

The average 30-year fixed-rate mortgage decreased to 4.55% from 4.60%, the average 15-year fixed-rate mortgage fell to 3.91% from 3.99%, and a one-year ARM declined to 6.84% from 6.90%.

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