Mortgage application activity continued to decline in August as elevated US treasury yields pushed mortgage rates higher. The Mortgage Bankers Association’s (MBA) Market Composite Index, a measure of total mortgage application volume, declined 3.2% month-over-month in August on a seasonally adjusted basis, marking the sixth consecutive monthly decline. Compared to a year ago, total mortgage applications declined 9.1%.
The monthly decline occurred in both major components. Purchase applications decreased 3.1% from July, while refinance applications declined 3.5%. Relative to August 2025, purchase and refinance activities were also down 2.5% and 16.6%, respectively.
The decline in market activity continued to slow down as the average contract rate for a 30-year fixed-rate mortgage rose. Compared to last month, the mortgage rate increased 8 basis points (bps) to 6.78%. The rate was also 9 bps higher than a year ago.
By loan type, applications for adjustable-rate mortgages (ARMs) and fixed-rate mortgages (FRMs) decreased 0.6% and 3.4% month-over-month, respectively. Compared with a year earlier, ARM application volume fell 18.2%, while FRM applications declined 8.2%. Despite the monthly decline in ARM applications, their share of total applications edged higher because ARM activity fell less than FRM activity. ARMs, including both purchase and refinance loans, accounted for 7.9% of total applications on a non-seasonally adjusted basis in August, up 0.2 percentage points from July but 0.9 percentage points below the share recorded a year earlier. The average contract interest rate for 5/1 ARMs was 5.90% in August.
Average loan sizes also declined across all categories in August. The overall loan size decreased 2.3% to $375,300. The average purchase loan size fell 0.8% to $441,000, while the average refinance loan size declined 4.5% to $283,000. The average ARM loan size edged down 1.5% to $923,800.
