The number of mortgage applications filed in the U.S. fell 4.3% for the week ending Aug. 24, an industry trade group said Wednesday.
Total applications fell as refinancing activity declined 6% from the previous week, according to the Mortgage Bankers Association.
Home purchases also cooled somewhat with the purchase index rising a slight 1% from a week earlier.
Mortgage rates declined during the week with the 30-year, fixed-rate conforming loan balance falling to 3.80% from 3.86% a week earlier, according to the MBA's survey of lenders.
The average jumbo 30-year FRM declined to 4.06% from 4.11% as the 30-year, FHA loan dropped to 3.60% from 3.62%.
The 15-year, FRM also fell to 3.12% from 3.15%, while the 5/1 ARM hit 2.68%, compared to 2.74% a week earlier.
Mortgage data firm HSH Associates believes rates started to increase as market confidence improved over parts of the summer. But now, with the market cautiously optimistic, rates are easing.
"Although rates hadn't climbed much off of record lows, no potential homebuyer or refinancer was happy to see even the slight increase in rates," said Keith Gumbinger, vice president of HSH. "As the economic news has been only slightly warmer in recent weeks, it appears that rates moved a little further than they should have, and are now settling back."