The Mortgage Bankers Association (MBA) reported Wednesday that its index of home purchase applications jumped 6.3 percent for the week ending September 3, 2010, reaching its highest level since the end of May.

Michael Fratantoni, MBA’s VP of research and economics, noted the rise in purchase activity relative to recent months, but he says homebuying demand is still well below levels seen prior to the expiration of the federal tax credit, and is almost 40 percent below the level recorded one year ago.

MBA’s index of applications for mortgage refinancing fell 3.1 percent from the previous week, as interest rates edged up slightly. The refinance share of mortgage activity dropped from 82.9 percent to 81.9 percent of total applications.

It was the first time refinance volume has dropped in six weeks, but Fratantoni says the level of applications to refinance remains close to recent highs, as historically low mortgage rates continue to entice borrowers.

The falloff in refinances pushed overall mortgage application volume last week down 1.5 percent compared to the previous week.

MBA reports that the average contract interest rate for 30-year fixed-rate mortgages increased to 4.50 percent last week for loans with an 80 percent loan-to-value (LTV) ratio. That’s up from 4.43 percent the week prior.

Contract rates for 15-year fixed-rate mortgages averaged 4.00 percent last week, compared to 3.88 percent the week before.

MBA says rates for adjustable-rate mortgages (ARMs) also rose. One-year ARMs increased to 7.00 percent from 6.95 percent.