Mortgage Applications Decline as Higher Interest Rates Strain Affordability

Mortgage applications declined this past week, according to new data from the Mortgage Bankers Association, as inflationary fears and continued anxiety over a prolonged Iran war have kept mortgage rates elevated.For the week ending Aug. 14, MBA's Market Composite Index—a measure of total mortgage loan application volume—fell 0.4% on a seasonally adjusted basis from one week earlier.The Purchase Index, deemed a leading indicator for home sales, fell 2% week over week on a seasonally adjusted basis, and was down 3% from a year earlier. Refinance activity gained 2% on the week but was down 18% annually.“Purchase applications decreased and were also lower than last year’s pace," says MBA Deputy Economist Joel Kan. "In addition to the economic uncertainty, affordability difficulties have reemerged as a reason for homebuyers to delay purchase decisions given the impact of higher mortgage rates on monthly mortgage payment.”Kan notes that borrowers with larger loan sizes remain less likely to refinance with rates hovering near their highest levels of the year."The average loan size on refinances continues to shrink, dipping to $282,200 last week, the lowest level since June 2025," the econ...