During the next couple of years, refinancing applications are expected to drop while purchase loans rise and interest rates gradually move up over 5 percent, according to a long-term report released by MBA on Tuesday.
The MBA's report estimates that high levels of unemployment will continue to hold back a more solid recovery in the housing market.
The four-week moving average for applications, which smoothes the volatile weekly figures, is up 1.4 percent. The purchase index average is down 0.7 percent, while the refinancing index is up 1.9 percent.
The refinance share of mortgage activity decreased to 82.3 percent of total applications from 82.49 percent the previous week.
The average rate on a 30-year fixed mortgage fell to 4.25, from 4.34, staying right around record lows.
The average rate on a 15-year fixed loan fell to 3.67 percent, from 3.74 percent.