Home loan applications decreased by 0.5% from a week earlier for the week ending Aug. 22, according to the Mortgage Bankers Association. This is the second straight week applications have been down.
The consecutive week of loan applications declining comes after mortgage interest rates held steady. The average rate on a 30-year fixed home loan is 6.58% for the week ending Aug. 21, according to Freddie Mac. The average rate was 6.46% during the same period in 2024.
The Market Composite Index, a measure of mortgage loan application volume, decreased 0.5% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 2% compared to the week prior.
The refinance index decreased 4% from the previous week and was 19% higher than the same week one year ago.
The seasonally adjusted purchase index increased 2% from one week earlier. The unadjusted purchase index decreased 0.1% compared with the week prior and was 25% higher than the same week one year ago.
The amount of homeowners choosing to refinance also dipped to 45.3% of total applications from 46.1% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 8.4% of total applications.
The Federal Housing Administration (FHA) share of total applications remained unchanged at 19.1% from the week prior.
Veterans Affairs share of total loan applications decreased to 13.3% from 13.4% the week prior. USDA share of total loan applications also decreased to 0.5% from 0.6% the week prior.
“Purchase applications had their strongest week in over a month, up 2 percent, and the average loan size increased to its highest level in two months at $433,400,” said Joel Kan, MBA’s vice president and deputy chief economist.
Home loan applications decreased for the second straight week.
Contract rates
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) slightly ticked up to 6.69% from 6.68%, with points remaining unchanged at 0.60 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate remained unchanged.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $806,500) increased to 6.67% from 6.64%, with points decreasing to 0.44 from 0.60 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased another week to 6.35% from 6.39%, with points increasing to 0.80 from 0.66 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
Meanwhile, the average contract interest rate for 15-year fixed-rate mortgages increased to 6.03% from 5.96%, with points increasing to 0.77 from 0.70 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.
The average contract interest rate for 5/1 ARMs decreased to 5.94% from 6.01%, with points increasing to 0.68 from 0.63 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
“Prospective buyers appear to be less sensitive to rates at these levels and are more active, bolstered by more inventory and cooling home-price growth in many parts of the country,” said Kan.
Mortgage rates calculated
Mortgage rates are calculated by various factors in the economy, and the length of your loan will also figure into the mortgage rate you qualify for.
The 30-year mortgage rate is tied to the yield of the 10-year Treasury note, according to Fannie Mae. As the yield on the 10-year Treasury note moves, mortgage rates follow.
The yield on the 10-year Treasury note is determined by expectations for shorter-term interest rates in the economy over the duration of a bond, plus a term premium.
