Application activity for mortgages fell sharply last week, dropping as rates on adjustable rate mortgages appear to have soared. The Mortgage Bankers Association reported Wednesday that its composite index of mortgage loan application volume was 652.5 for the week ending November 23, 2007 -- a decrease of 4.3 percent on a seasonally- and holiday-adjusted basis from one week earlier. The overall drop was driven by a sharp 15.3 percent drop in refinancing applications, according to MBA data, even while purchase application activity increased 6.1 percent. Application mix shifted dramatically as a result, with the refinance share of mortgage activity decreasing to 45.8 percent of total applications from 50.3 percent the previous week. ARM share of the overall application mix also slipped to 14.6 from 15.8 percent one week earlier, amid increasing rates for adjustable rate mortgages. The MBA reported that the average contract interest rate for one-year ARMs increased to 6.24 percent from 5.98 percent, with points increasing to 0.96 from 0.89 (including the origination fee) for 80 percent LTV loans. That rate is the highest in months, and likely the result of increases in Libor; such increases would seem likely to have curtailed interest in refinancing for many borrowers. For more information, visit http://www.mortgagebankers.org.