Mortgage rates that rose last week to their highest levels since late last summer caused mortgage applications to fall for the second consecutive week, according to the Mortgage Bankers Association (MBA).

The MBA’s Market Composite Index (MCI), a measure of mortgage application volumes, dropped 8.5% on a seasonally adjusted basis over the seven days ending May 22, which followed a 2.3% decline over the previous week.

Weakened purchasing power for buyers sent the seasonally adjusted purchase component index down by 0.4% from one week earlier. Diminished incentives for refinance candidates pushed that component index lower by 18%.

Nevertheless, refinance and purchase application volumes remained higher than year-ago levels, said Joel Kan, deputy chief economist at the MBA, commenting in Wednesday’s report.

The purchase index was 5% higher than a year ago, slightly lower than 8% year-over-year growth the previous week. The refinance index was up by 19% from the same week last year.

“The 30-year fixed rate has increased 30 basis points over the past five weeks to its highest level since August 2025,” said Kan. “With the rate now at 6.65%, many borrowers understandably backed away from refinancing last week.”

The higher mortgage rates caused the refinance share of total applications to recede to 37.5% last week — its lowest share since last June — from 42% the prior week. The adjustable-rate mortgage share of activity remained elevated last week at 9.4% of all applications compared to 9.6% the previous week.

Average contract interest rates for 30-year fixed-rate conforming mortgages had been around 6.56% and 6.46% over the previous weeks, according to MBA data.

Inflationary impacts from President Donald Trump’s signature tariff policies have been turbocharged by his ongoing war with Iran, which has introduced the worst bout of inflation since 2023, government data shows. A global energy supply shock and related trade disruptions have pushed mortgage rates well above prewar levels around 6%.

Mortgage rates that moved even higher than recent wartime averages ultimately led to “large declines in applications across loan types,” said Kan. Borrowers with “smaller loan sizes” have been particularly impacted, he explained, as their purchasing power has eroded.

The share of applications for home loans insured by the Federal Housing Administration (FHA) declined to 17.2% during the third week of May from 17.9% the prior week. The share of applications for mortgages backed by the Department of Veterans Affairs decreased to 13.2% from 14.4% one week earlier.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA increased to 6.31% from 6.24% and 6.16% over the prior weeks, according to MBA data.