The level of mortgage applications took a turn for the worse last week, as refinancing activity declined significantly. The Mortgage Bankers Association said its market composite index decreased 12.9% on a seasonally adjusted basis for the week ended Jan. 21. Unadjusted, the index fell 12% from the prior week. The MBA said results don't include an adjustment for last Monday's Martin Luther King Jr. holiday. After rising for three weeks, the number of refinancing applications fell 15.3% last week to the lowest point in 12 months, according to the MBA. And purchase applications didn't fare any better dropping 8.7% to the lowest point since October. The unadjusted purchase index fell 3.1% from the prior week and was 20.8% lower than a year earlier. In four-week moving averages, the market index is down 1%, with the purchase index off 3.7% and the refinance index down just 0.1%. With the precipitous drop in refinancings last week, these loans accounted for 70.3% of all mortgage applications down from 73% the previous week. When interest rates hovered around 4% in the fall, refinancings were accounting for more than four-fifths of all mortgages. The MBA said the average interest rate for a 30-year, fixed-rate mortgage rose to 4.8% last week from 4.77% the prior week. The average rate for a 15-year, fixed-rate mortgage fell to 4.12% from 4.16%. Later Wednesday, the Commerce Department is set to report figures for new home sales. Analysts surveyed by Econoday expect an increase of about 3% to an annual rate of 300,000 units. New home sales hit a record low of 274,000 in July. Write to Jason Philyaw.