The 30-year conforming rate climbed to 6.78% in the week ending Aug. 21, pushing purchase and refinance demand lower
Mortgage application volume pulled back last week as borrowing costs edged to their highest point in three weeks, adding fresh pressure to a housing market already struggling to find momentum through the summer.
Total applications fell 1% on a seasonally adjusted basis in the week ending August 21, according to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey. On an unadjusted basis, the index declined 2% from the prior week.
The average contract interest rate on a 30-year fixed-rate conforming mortgage — covering loan balances up to $832,750 — rose to 6.78% from 6.77%, with points increasing to 0.66 from 0.65, including the origination fee, for loans with a 20% down payment. That is the highest rate in three weeks.
Rates have climbed approximately 20 basis points over the past two months, according to Joel Kan, the MBA's vice president and deputy chief economist.
High mortgage rates are expected to keep the US housing market subdued through the remainder of 2026, leaving originators with limited runway to generate volume without a sustained rate decline.
US home prices rose 2.1% year over year in Q2 2026, according to the Federal Housing Finance Agency (FHFA), but inflation continued to outpace appreciation, extending real-term home price declines despite positive nominal growth.https://t.co/7ilIElFiKx
— Mortgage Professional America Magazine (@MPAMagazineUS) August 25, 2026
Refinancers retreat as loan sizes shrink
The Refinance Index fell 2% for the week and was 17% below the same period a year ago, when rates were nine basis points lower.
Despite that, refinancing's share of total applications edged slightly higher to 42.0% from 41.9%, a reflection of purchase demand weakening in parallel rather than any genuine improvement in refi economics.
"Refinance applications decreased, particularly for FHA and VA loans, and the average loan size for refinances was at its lowest since June 2025," Kan said.
Rates across product categories moved broadly higher. The 30-year jumbo rate rose to 6.73% from 6.71%, the 15-year fixed climbed to 6.10% from 6.08%, and the 5/1 adjustable-rate mortgage averaged 5.98%, up from 5.94%.
Adjustable-rate products accounted for 7.9% of total applications, ticking higher as cost-sensitive borrowers sought to reduce initial monthly payments. Points on jumbo loans increased to 0.50 from 0.48.
Purchase demand trails year-ago levels
Purchase applications slipped 0.3% on a seasonally adjusted basis and were 5% below the same week in 2025, extending two consecutive months of underperformance against the prior-year pace.
The weakness was concentrated in government-backed lending: FHA applications dropped 7% for the week, with FHA's share of total volume declining to 16.2% from 17.1%.
"Purchase activity was down over the week, driven by a 7% decrease in FHA applications. The purchase market has also slowed these past two months," Kan said.
VA loans offered a modest counterpoint, rising to 12.8% of total applications from 12.6%. USDA volume held at 0.5%. The softness at the entry-level end is consistent with July builder application data showing declining new-home purchase demand among first-time buyers, who are most sensitive to rate-driven affordability shifts.
Separately, data from Realtor.com found fewer all-cash buyers in the current market compared with a year ago, a dynamic that may give financed borrowers a modest competitive edge as seller pressure eases.
Stay updated with the freshest mortgage news. Get exclusive interviews, breaking news, and industry events in your inbox, and always be the first to know by subscribing to our FREE daily newsletter.
