Mortgage application volumes rose during the first week of August, the Mortgage Bankers Association (MBA) said Wednesday, though purchase and refinance activity remained below year-ago levels as elevated borrowing costs impede demand.

The MBA’s Market Composite Index, a measure of mortgage loan application volumes, increased 3.6% on a seasonally adjusted basis over the week ending Aug. 7.

Refinance applications that were 5% higher from the previous week were nevertheless 22% lower than the same week a year ago. Seasonally adjusted purchase activity rose 3% from the previous week but was 1% lower year over year on an unadjusted basis.

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“After five consecutive weeks of increases, mortgage rates declined slightly last week as oil prices dipped briefly on the hopes of a sustained resolution to the war in Iran,” noted Joel Kan, deputy chief economist of the MBA, in commentary accompanying the figures.

Those five weeks of increases pushed mortgage financing costs to one-year highs by the end of July — corresponding to an 11% decline in mortgage rate lock activity over the month — market intelligence firm Optimal Blue reported separately Tuesday.

Mortgage rates on 30-year fixed-rate loans that conform to Fannie Mae and Freddie Mac underwriting guidelines averaged 6.77% last week, down four basis points from 6.81% the previous week and marking their 13th consecutive week above 6.5%.

MBA data shows 30-year rates averaged around 6.1% in February, just prior to the start of the ongoing Iran war, which has caused inflation and economic uncertainty to surge.

“The reprieve in rates supported an increase in both purchase and refinance applications over the week, although the pace of applications has fallen below last year’s pace in recent weeks,” added Kan.

Refinance applications as a share of total applications maintained their prior-week level around 40%.

Across government programs, the share of applications for loans insured by the Federal Housing Administration was unchanged from the previous week at 17.3%, while the average mortgage rate for 30-year fixed-rate FHA loans was also unchanged at 6.43%.

Meanwhile, applications for loans backed by the Department of Veterans Affairs were also flat from the previous week at 12.3% of overall activity.