Mortgage application volumes notched a third consecutive week of declines amid elevated borrowing costs and economic uncertainty linked to the ongoing Iran war, newly released figures from the Mortgage Bankers Association (MBA) show.

The MBA’s Market Composite Index (MCI), a measure of mortgage application volumes, fell 2.5% on a seasonally adjusted basis over the week ending May 29. Overall application volumes declined 8.5% and 2.3% over the two preceding weeks.

Despite the average mortgage rate on typical 30-year home loans retreating slightly from nine-month highs, three consecutive weeks above 6.5% have prompted a sustained slowdown in mortgage demand in May.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances eased to 6.57% compared to 6.65% and 6.56% over the previous sessions. Mortgage rates hovered at 6.45% over the two weeks spanning the last week of April and first week of May, according to MBA data.

“The prospect of easing energy prices given the evolving situation in the Middle East brought mortgage rates slightly lower last week,” said Joel Kan, deputy chief economist at the MBA, commenting in Wednesday’s report. “The retreat in rates, however, did not lead to an increase in mortgage applications.”

The refinance component index of the MCI declined 2% while remaining 20% higher than the same week a year ago, when the average 30-year mortgage rate was slightly above 6.9%, according to MBA data.

Meanwhile, the seasonally adjusted purchase component index dropped 3%, a sharper pullback than the 0.4% decline posted the previous week. While the unadjusted purchase index was 14% lower over the week. it remained 7% higher than year-ago levels, signaling resilient homebuying demand.

“Purchase applications remained ahead of 2025’s pace but were at its slowest weekly pace since April, and refinance activity was at its weakest since last June,” added Kan.

The refinance share of application activity rose slightly as purchase volumes beat their retreat, increasing to 38% of all applications from 37.5% the previous week. The adjustable-rate mortgage share of applications declined to 8.5% from elevated levels around 9.5% over the two preceding weeks.

The share of applications for home loans insured by the Federal Housing Administration (FHA) fell to 17% from 17.2% and 17.9% over the previous weeks. The share of applications for mortgages backed by the Department of Veterans Affairs rose on the week to 14.4% from 13.2%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA fell to 6.26% from the previous week’s monthly high of 6.31%, though remained higher than the 6.16% rate for FHA loans observed at the beginning of May.