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The Mortgage Bankers Association (MBA) released its weekly report on mortgage applications this morning, noting a decrease of 1.7% in the group’s seasonally adjusted composite index, following a drop of 6.4% for the previous week.

The seasonally adjusted purchase index fell by 2% from the previous report. On an unadjusted basis, the composite index dropped by 1% week-over-week. Year-over-year, the unadjusted purchase index is up 3% for the week and up 17% year-over-year.

The share of refinancings dropped from 78% last week to 77%.

The average contract interest rate for a conforming 30-year fixed-rate mortgage rose from 3.75% to 3.78%, the highest level since last August. The rate for a jumbo 30-year fixed-rate mortgage decreased from 3.98% to 3.94%. The average interest rate for a 15-year fixed-rate mortgage rose from 3.01% to 3.03%, also the highest rate since September.

The contract interest rate for a 5/1 adjustable rate mortgage remained unchanged at 2.66%.

Mortgage rates continue to rise modestly as more buyers and refinancers get into the market. A stronger recovery, however, could be more dependent on housing inventory, and that is very low right now and not showing strong signs of significant growth.

Later today we will get data from the Census Bureau on new housing starts. The consensus estimate calls for a drop to a seasonally adjusted annual rate from 954,000 in December to 914,000 in January. The December starts were the highest in four years.