Mortgage Applications Rise 3.6% as Rates See Slight Dip, Refinance Activity Lags Year-Over-Year

Mortgage applications experienced a notable increase of 3.6% for the week ending August 7, 2026, as reported by the Mortgage Bankers Association (MBA) in their weekly mortgage applications survey. This uptick followed a period of slight declines in mortgage rates, which had been hovering near their yearly highs. On an unadjusted basis, the overall index for mortgage applications saw a 3% increase compared to the preceding week. The refinance index, a key indicator of homeowners seeking to replace existing mortgages, climbed 5% week-over-week. However, this segment of the market remained considerably weaker when compared to the same week in the previous year, standing 22% lower than in 2025. Consequently, the refinance share of total mortgage activity edged up to 40.7% of all applications, a modest rise from 39.9% in the prior week.

The purchase index, which reflects new home buying activity, also demonstrated positive momentum. The seasonally adjusted purchase index increased by 3% from the week before. Similarly, the unadjusted purchase index saw a 2% increase week-over-week. Despite this weekly gain, the unadjusted purchase index was still 1% lower than the corresponding week in 2025, indicating a persistent year-over-year slowdown in purchase originations.

Joel Kan, CMB, the MBA’s vice president and deputy chief economist, attributed the overall increase in mortgage applications to a temporary "reprieve in rates." He explained that oil price dips, fueled by hopes of a resolution to the war in Iran, briefly led to a decline in mortgage rates. Specifically, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased by four basis points to 6.77% from 6.81% in the previous week. While this offered a slight incentive, Kan emphasized that rates remained close to their highest level in a year. This modest rate reduction provided a boost to both purchase and refinance applications, though the overall pace of applications has fallen below last year’s pace in recent weeks. Kan further observed that as refinance incentives have diminished with rates at current levels, the average loan size for refinance applications has contracted to its lowest point since July 2025, suggesting borrowers are seeking smaller refinance amounts or fewer are refinancing altogether.

Activity across all product types remained unchanged week-over-week, highlighting stability in the composition of mortgage demand. The share of adjustable-rate mortgages (ARMs) held steady at 7.9% of total applications. Government-backed loan shares also showed consistent performance. The Federal Housing Administration (FHA) share remained at 17.3% of total applications, the U.S. Department of Veterans Affairs (VA) share was unchanged at 12.3%, and the U.S. Department of Agriculture (USDA) share stayed at 0.5%. These figures underscore a consistent demand for government-insured or guaranteed loans within the mortgage market.