Mortgage Applications Fall as Elevated Rates Discourage Late-Summer Buyers

Mortgage applications declined this week as interest rates ticked higher, driven by unrest in the Middle East, tariff wars with Canada, and continued concerns over inflation.For the week ending Aug. 26, MBA's Market Composite Index—a measure of total mortgage loan application volume—fell 1% on a seasonally adjusted basis from one week earlier, and is down 5% year over year. The Purchase Index, deemed a leading indicator for home sales, fell 0.3% week over week on a seasonally adjusted basis, and was down 5% from a year earlier. Refinance activity decreased 2% on the week and was down 17% annually.Joel Kan, MBA's vice president and deputy chief economist, attributed the downward shift to rising interest rates."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, with applications now 5% behind last year’s pace," said Kan. The increase in mortgage rates also slowed refinancing activity. "Refinance applications decreased, particularly for FHA and VA loans, and the average loan size for refinances was at its lowest since June 2025," said Kan. The 30-year-fixed-rate mortgage rate rose to 6.78% f...