Mortgage Applications Rebound as Purchase Activity Picks Up — Evening Brief – 07.22.26
Home purchase demand regained momentum last week as improving housing inventory encouraged buyers to re-enter the market, even as mortgage rates moved higher amid renewed concerns over inflation and energy prices, according to data released Wednesday by the Mortgage Bankers Association (MBA).
The MBA’s Market Composite Index, which measures mortgage loan application volume, increased 1.9% for the week ended July 17 to 264.0, reversing part of the previous week’s 2.7% decline.
The gain was driven by a rebound in home purchase activity. The Purchase Index climbed 5.5% to 165.8, following a 7.3% decline the previous week, signaling that prospective homebuyers are taking advantage of increased inventory despite elevated borrowing costs.
Refinancing activity, however, softened as higher mortgage rates reduced incentives for existing homeowners. The Refinance Index fell 2.4% to 802.3, after rising 3.5% in the prior week.
The average contract rate for a 30-year fixed-rate mortgage increased to 6.69% from 6.65% a week earlier.
“Purchase volume increased modestly for the week. Growing home inventory in many markets is supporting more purchase activity,” said Mike Fratantoni, the MBA’s senior vice president and chief economist.
Fratantoni cautioned that recent improvements in inflation may prove temporary.
“Incoming data showed that inflation dropped in June, but with oil prices spiking again, that improvement seems unlikely to continue in July data, and mortgage rates are likely to remain higher as a result,” he said.
The divergence between purchase and refinance trends reflects the current market reality: buyers are gradually returning as more homes come to market, but the rate environment remains too elevated to trigger meaningful refinance demand. The renewed rise in oil prices signals that the brief window of rate optimism following June’s softer inflation print may be closing before it translates into meaningful mortgage market relief.