WASHINGTON - Mortgage applications rose 8.7% in the week that ended July 20, the Mortgage Bankers Association reported on Wednesday.

The market composite index, which measures loan purchase and refinance activity, increased to 509.2. The MBA's purchase index rose 4.7%, to 324.9, and the refinance index jumped 14%, to 1581.4.

Refinancing represented 43.6% of total applications, up from 41.6% the previous week, while adjustable rate mortgage activity dipped to 11.1% from 11.3% the previous week.

The average contract interest rate for 30-year fixed-rate mortgages was 6.99%, down from 7.09% the previous week. The average contract interest rate for one-year ARMs was 5.66%, versus 5.7% the week before.

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