Despite a dip in long-term mortgage rates, the number of people applying for a mortgage fell 2.2 percent last week, according to a weekly survey released by the Mortgage Bankers Association (MBA) Wednesday. Although week-to-week demand declined, mortgage application volume is still up 22.7 percent compared to this time last year.

For the week ending August 28, 2009, MBA’s refinance index decreased 3.1 percent from the previous week, while the purchase index fell 1.0 percent. The only segment of the survey that posted an increase in activity was the government purchase index, which rose 0.5 percent — the seventh consecutive weekly gain. For the month of August, the government-insured share of purchase applications was 40.4 percent for the month of August, up from 38.3 percent in July and 31.7 percent in August 2008. The distribution of government-backed home loans has reached its highest level since February 1991. MBA reported the average rate for 30-year fixed-rate mortgages at 5.15 percent last week. That’s an improvement over the 5.24 percent average rate the week prior. Rates for 15-year fixed-rate mortgages averaged 4.57 percent during the final full week of August, down slightly from 4.58 percent one week earlier.