According to HousingWire, the Mortgage Bankers Association reported that mortgage applications dropped 1% for the week ending August 21, 2026. The main driver behind this decline was a rise in the 30-year fixed rate, which climbed to 6.78%. This uptick in rates represents the highest level we've seen in three weeks, and rates have been climbing overall over the past couple of months.
The refinance sector took a particular hit, with refinance applications falling 2% week over week. What's more striking is that refinance activity is running significantly behind where it was a year ago. The MBA's chief economist noted that the decline was especially steep for FHA and VA refinance loans, and the average loan size for refinances hit its lowest point since June 2025. It appears that folks who might have been thinking about refinancing are holding back as rates creep higher.
Purchase applications also slowed during this period. On a seasonally adjusted basis, purchase activity was relatively flat, but when looking at the raw numbers, purchase applications fell compared to the previous week and are trailing last year's pace. The weakness was particularly noticeable in FHA purchase loans, which dropped noticeably. So we're seeing softness on both sides of the business.
The data does offer a glimmer of hope, though. According to analysis from Xactus, which tracks mortgage intent through credit-pull activity, the year-over-year decline in borrower intent has been narrowing, suggesting that the market might be stabilizing even with rates remaining elevated. While seasonal factors could explain some of this improvement, it hints that the intense pressure from rising rates might finally be leveling off.
What I am seeing locally here in the Bay Area and across the East Bay is that these national trends are playing out in real time with our clients. The combination of higher rates and softening purchase demand is making people more cautious about timing. Refinance opportunities are drying up fast for folks who didn't move earlier in the year, and buyers are taking longer to make decisions. It's a market where patience and strategic thinking are paying off more than ever.
