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The Mortgage Bankers Association reported today that applications for home loans fell last week for the second time in five weeks. The industry group's market composite index decreased by 0.6% compared to the previous seven-day period. This marks the fifth time in 10 weeks that the index has headed lower. At the present level, it's off its May high by 51%.

As I've noted on multiple times over the last few months, it's clear that higher mortgage rates are responsible for the downward trend.

Since the first week of May, the average rate on a conforming 30-year fixed-rate mortgage has skyrocketed, going from 3.35% all the way up to 4.57% in September -- though, over the last few weeks following the Federal Reserve's decision not to taper, the rate dropped back down to 4.28%. The recent correction aside, however, the magnitude and speed of the advance have been unprecedented.

Applications to refinance existing mortgages have been the hardest hit by the hike in rates. Seven weeks ago, the MBA's refinance index dropped by a precipitous 20%, the biggest single-week decline of 2013. With this in mind, last week's results, in which refinance applications were only down by 1%, can be interpreted as a positive sign for the industry.

Despite last week's uptick, refinance volumes are still off their early May high by 60%. And over the same time period, they've gone from a 76% share of overall mortgage application activity down to a 65% share.

Applications to purchase a home haven't been hit as hard. The MBA's purchase index increased last week by 1%, though purchase-money mortgage applications remain down over the last five months by a comparatively reasonable 20%. Compared to the same month last year, they're down by 3.9%.

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