The Mortgage Bankers Association's weekly report on mortgage applications showed a decrease in demand as rates ticked upward to 3.85% from 3.83% on conventional 30-year loans.

The Market Composite Index, a measure of mortgage loan application volume, decreased 4.1 percent on a seasonally adjusted basis from one week earlier.  The refinance share of mortgage activity decreased to 54.4 percent of total applications from 55.4 percent the previous week.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to 3.85 percent from 3.83 percent. The average contract interest rate for 15-year fixed-rate mortgages increased to 3.09 percent from 3.06 percent.

"Rising oil prices and an improved outlook for global economic growth combined with declining U.S. jobless claims to push U.S. Treasurys higher during the latter half of last week," Lynn Fisher, MBA's vice president of research and economics, told CNBC.

Related Stories:

• Zillow: Americans Are Now Renting 6 Years Before Buying
• Dick Bove: There's A New Mortgage Crisis Brewing