A week after rebounding slightly, mortgage applications fell sharply in the third full week of July, marking the third decline in the past four weeks, the Mortgage Bankers Association (MBA) reported Wednesday. The group pointed to the highest interest rates in nearly a year, driven higher by last week’s spike in oil prices amid the Iran conflict, as the primary reason for the slowdown.

The Market Composite Index, the MBA’s measure of mortgage loan application volume, decreased 6.4% on a seasonally adjusted basis over the seven-day period ending July 24. The index fell 6% from the previous week on an unadjusted basis.

Refinance applications led the downturn, plunging 10% from the previous week and slipping 2% below their level from the same week one year ago.

The purchase market also saw large declines in applications. The seasonally adjusted purchase index decreased 4% from one week earlier, while unadjusted it decreased 3% compared with the previous week. Even so, purchase applications remained 3% higher than the same week a year ago.

“Following last week’s spike in oil prices, mortgage rates moved higher, with the 30-year fixed rate increasing to 6.76%, the highest rate since August 2025,” said Joel Kan, vice president and deputy chief economist at the MBA, in commentary accompanying the figures.

“This upward trajectory in rates continues to significantly impact refinance borrowers, with a 10% decline in refinance applications, including a steeper drop in government refinances,” Kan added.

The refinance share of mortgage activity fell to 39.5% of mortgage activity from 41.2% the previous week. The adjustable-rate mortgage (ARM) share rose to 8.1% of total applications.

“Despite housing inventory increasing in certain markets, higher rates have added to ongoing affordability challenges for many homebuyers, which drove the decrease in purchase activity over the week,” Kan observed.

Government loans weren’t exempt from the decreases. The share of loans backed by the Federal Housing Administration decreased to 16.9% from 17% a week earlier, and those backed by the Department of Veterans Affairs dropped to 12.6% from 13.2% the week prior. The U.S. Department of Agriculture share of applications fell to 0.4% from 0.5% the previous week.