A small reduction in mortgage interest rates, after five weeks of rising, was enough to bring some relief and move the real estate market in the United States. Total mortgage application volume grew 3.6% last week compared to the previous period, according to seasonally adjusted data from the Mortgage Bankers Association (MBA) released on August 12. The slight improvement in demand shows the sector’s sensitivity to any variation in financing costs.
- The average interest rate for 30-year fixed mortgages with conforming loan balances (up to $832,750) decreased to 6.77% from 6.81%.
- Home loan refinance applications rose 5% for the week, but were still 22% below the same period a year ago.
- Mortgage applications for property purchases rose 3% in the week, although they remained 1% lower compared to last year.
The average contractual interest rate for 30-year mortgages with a conforming loan balance valued at up to $832,750 fell to 6.77% from 6.81%. Furthermore, the fee “points” paid to reduce the interest on the loan increased from 0.65 to 0.67, considering the origination fee for financing with a 20% down payment.
The slight drop in interest rates was driven by the decrease in oil prices. “Mortgage rates fell slightly last week as oil prices briefly eased in anticipation of a sustained resolution to the conflict in Iran,” said Joel Kan, vice president and deputy chief economist at MBA, in a statement.
Learn more: Mortgage applications rise in the United States as rates fall to their lowest level in a month
Requests for refinancing real estate loans increased by 5% during the week analyzed. However, this volume is still 22% below that recorded in the same week a year ago, when rates were 10 basis points lower.
Kan said that with rates at current levels, incentives to refinance have diminished, bringing the average loan value for refinancing to its lowest level since July 2025.
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Mortgage applications to purchase properties grew 3% in the last week, but are still 1% below the previous year. The month of August is historically one of the slowest periods for home sales, and this year appears to be even weaker than last due to high home prices, economic uncertainty, and the lack of significant improvement in the supply of homes available on the market.
Earlier this week, mortgage rates rose slightly, according to a separate survey released by Mortgage News Daily. Future variations may be more significant, depending on the results of the monthly consumer price index (CPI), which is scheduled to be released this Wednesday.
Matthew Graham, chief operating officer of Mortgage News Daily, said the CPI is one of the most important monthly economic data points when it comes to interest rates. He added that while it is impossible to predict the exact impact, a large deviation from expectations will likely result in a significant movement in rates, either up or down.