Mortgage application volume fell 14.1% during the week ending July 25, according to Mortgage Bankers Association’s weekly application survey.

Volume fell even though interest rates on fixed-rate mortgages moved back from steep increase a week earlier.

The overall application index fell to 420.8 from 489.6 a week earlier. The index includes refinance volume which dropped 22.9% during the week, while purchase application volume fell 7.8%. Refinance applications covers for 35.2% of total application volume during the week.

The index was started in March 16, 1990 using an index value of 100 which is equivalent to the application volume during that week. The index was at its peak during the week ending May 30, 2003, at the height of the housing boom with a reading of 1,856.7.

The survey provides a picture of mortgage lending activity among mortgage bankers, commercial banks and thrifts. It covers about 50% of all residential retail mortgage originations each week.

The average rate for traditional, 30-year fixed-rate mortgages fell to 6.46% from 6.59% during the previous week. Rates for 15-year fixed-rate mortgages - often a popular option for refinancing a home - fell to 5.98% from 6.10%.

The average rate for one-year adjustable-rate mortgages rose to 7.25% from 7.16% a week earlier.