Mortgage application activity slowed in July amid continuation of the war in Iran. The Mortgage Bankers Association’s (MBA) Market Composite Index, a measure of total mortgage application volume, declined 6.6% month-over-month in July on a seasonally adjusted basis. Compared to a year ago, total mortgage applications declined 1.5%, the first year-over-year decline in two years.
The market decline occurred in both major components. Purchase applications decreased 6.4% from June, while refinance applications declined 7.2%. Relative to July 2025, purchase and refinance activities were also down 2.4% and 0.1%, respectively.
The slowdown coincided with higher borrowing costs as ongoing conflict in Iran pushed the average contract rate for a 30-year fixed-rate mortgage up 11 basis points (bps) to 6.70%. Nonetheless, the rate remained 12 bps lower than its level a year ago.
By loan type, applications for adjustable-rate mortgages (ARMs) and fixed-rate mortgages (FRMs) decreased 12.5% and 6.1% month-over-month. Compared with a year earlier, ARM application volume was unchanged, while FRM applications declined 1.6%. ARMs, including both purchase and refinance loans, accounted for 7.7% of total applications on a non-seasonally adjusted basis in July. This was 0.5 percentage points lower than in June and 0.1 percentage points higher than the share recorded a year earlier. The average contract interest rate for 5/1 ARMs was 5.9% in July.
Average loan sizes declined across all categories in July. The overall loan size decreased 2.5% to $383,600. The average purchase loan size fell 2.6% to $444,600, while the average refinance loan size declined 2.2% to $296,000. The average ARM loan size edged down 0.7% to $937,600.
