Applications for U.S. home mortgages fell last week, largely reflecting a drop in demand for refinancing loans even as interest rates declined, an industry group said on Wednesday.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 4.3 percent in the week ended Sept. 30.

The MBA's seasonally adjusted index of refinancing applications fell 5.2 percent, while the gauge of loan requests for home purchases fell 0.8 percent.

Fixed 30-year mortgage rates averaged 4.18 percent in the week, down 6 basis points from 4.24 percent the week before.