Mortgage rates fell slightly last week after five consecutive weeks of gains, pulling total application volume 3.6% higher compared with the previous week, the Mortgage Bankers Association said. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $832,750 or less decreased to 6.77% from 6.81%, with points increasing to 0.67 from 0.65, including the origination fee, for loans with a 20% down payment.
The decline was modest but enough to bring demand back to the market. Applications to refinance a home loan rose 5% for the week but were 22% lower than the same week one year ago, when rates were 10 basis points lower. Applications for a mortgage to purchase a home rose 3% for the week and were 1% lower year over year.
Joel Kan, vice president and deputy chief economist at the MBA, said mortgage rates declined slightly as oil prices dipped briefly on the hopes of a sustained resolution to the war in Iran. The move, though small, was sufficient to trigger a measurable uptick in application activity.
Refinance activity has softened as rate incentives have dwindled. The average loan size for refinance applications fell to its lowest level since July 2025, Kan said. That metric suggests borrowers who still have strong economic incentive to refinance at current levels have already acted, leaving a thinner pool of candidates at the margin.
Purchase applications remain muted despite the weekly gain. August is typically one of the slowest months for home sales, but this year appears to be even weaker than last year, due to stubbornly high home prices and less certainty in the overall economy, the MBA said. The supply of homes for sale has also not improved meaningfully.
Mortgage rates moved slightly higher to start this week, according to a separate survey from Mortgage News Daily. Rates could move more decisively depending on the results of the monthly consumer price index, set for release Wednesday.
Matthew Graham, chief operating officer at Mortgage News Daily, wrote that the CPI report is one of the most important pieces of monthly economic data as far as rates are concerned. There is no way to know how it will impact rates ahead of time, he said, only that a large deviation from expectations is likely to result in a larger-than-average move higher or lower.
The data underscore the sensitivity of mortgage demand to even small rate movements in a market where affordability constraints remain tight. Home prices have not adjusted meaningfully lower, and economic uncertainty has kept many prospective buyers on the sidelines. The combination has left August 2026 shaping up as a weaker selling season than the prior year, despite the recent marginal improvement in application volume.