Mortgage application volumes decreased last week, reversing the modest gains observed in the first week of August, the Mortgage Bankers Association (MBA) said Wednesday.

The MBA’s Market Composite Index, a measure of mortgage loan application volumes, fell 0.4% on a seasonally adjusted basis over the week ending Aug. 14, driven by a pullback in purchase demand.

The seasonally adjusted purchase component index declined 2% from the previous week and was 3% lower in the second week of August than the same week a year ago on an unadjusted basis. The purchase index has posted annual declines for three consecutive weeks.

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Refinance activity, however, rose 2% over the week, but was down 18% from a year earlier.

“Mortgage rates and applications changed little last week,” said Joel Kan, deputy chief economist for the MBA, in commentary accompanying the data.

Average mortgage rates for 30-year fixed-rate home loans were unchanged from the prior week at 6.77%, remaining higher than the 6.68% average recorded a year ago. After starting the year around 6%, 30-year rates have exceeded 6.5% for 14 consecutive weeks, according to MBA data.

Homebuying activity has slowed over the almost six months since the Iran war commenced in late February, as inflation has reaccelerated, home financing costs have risen and consumer confidence has deteriorated.

“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 payments,” Kan added.

According to recent reporting from the listings platform Redfin, 2.5% of active buyers dropped out of the market in July, widening the gap between sellers and buyers in the market to near record levels.

The weekly rise in refinance demand pushed refinance share of total activity to almost 42% from 40.7% the previous week, supported by the decline in purchase volumes. Kan noted that the average loan size on refinances fell to its lowest level since June 2025 last week to $282,200, as higher rates make refinancing larger loan balances less attractive.

Across government programs, the share of applications for loans insured by the Federal Housing Administration dipped slightly to 17.1% from 17.3% the previous week. The average mortgage rate for 30-year fixed-rate FHA loans rose to 6.45% from 6.43%.

Applications for loans backed by the Department of Veterans Affairs rose slightly last week to 12.6% of overall activity, from 12.3% the prior week.