Mortgage rates fall as applications edge higher after five-week climb

Mortgage rates fall applications data showed a modest rebound in the week ending Aug. 7 after five weeks of mortgage-rate increases. The Mortgage Bankers Association’s 30-year conforming fixed contract rate slipped to 6.77% from 6.81%, and total applications rose 3.6% from the prior week, CNBC reported.

For prospective buyers and homeowners considering a refinance, the figures show that a small weekly rate move coincided with more activity. They do not show a broad housing-market recovery: purchase applications remained 1% below their level a year earlier, while refinance applications were 22% lower, according to CNBC’s report on the MBA data.

Why did mortgage applications rise when rates fell?

Applications to buy a home increased 3% week over week, and refinance applications rose 5%, CNBC reported. The increase followed a weaker prior week. For the week ending July 31, the MBA said total applications fell 2.9%, purchase applications fell 4%, and refinance applications fell 2% as its conforming 30-year contract rate reached 6.81%.

The MBA rate moved up from 6.65% in the week ending July 10 to 6.81% by July 31, before the latest decline to 6.77%. The latest move was 0.04 percentage points, or four basis points.

Joel Kan, the MBA’s vice president and deputy chief economist, said the slight decline in rates came as oil prices briefly fell on hopes for a sustained resolution to the war in Iran. That is an economist’s assessment of the week’s move, rather than proof of a direct cause.

What the rate figure does and does not measure

The 6.77% figure is the MBA’s average contract rate for 30-year fixed mortgages with conforming balances of $832,750 or less. CNBC reported that the MBA recorded 0.67 points, including the origination fee, for loans with a 20% down payment, up from 0.65 in the preceding week.

Readers may see a different rate in other weekly surveys. Freddie Mac’s Primary Mortgage Market Survey put the 30-year fixed average at 6.69% as of Aug. 6, up from 6.66% a week earlier. Freddie Mac says its measure draws on loan applications submitted through its Loan Product Advisor system and averages rates offered from the prior Thursday through Wednesday. Different timing and survey methods can produce different readings.

Why the rebound remains limited

CNBC reported that high home prices, economic uncertainty and little meaningful improvement in homes for sale were still weighing on purchase demand. The year-over-year comparisons make that constraint visible: a weekly improvement in applications has not yet returned either purchase or refinance demand to last year’s level.

Higher rates and home prices can squeeze affordability at the same time. In separate, dated 2024 research, the Consumer Financial Protection Bureau found that both factors had reduced affordability and contributed to a lock-in effect, in which owners with lower-rate mortgages are reluctant to move. That background helps explain why a four-basis-point weekly decline may improve activity at the margin without changing the broader affordability problem.

This story draws on original reporting from CNBC.