As mortgage rates remained stubbornly high last week, hovering around 6.87%, mortgage applications fell from a week prior. For the week that ended July 21, mortgage applications fell 1.8% from the prior week, according to data from the Mortgage Bankers Association. 

“Mortgage rates were essentially flat last week but remained high, with the 30-year fixed staying at 6.87% and contributing to a pullback in mortgage applications,” said Joel Kan, MBA’s vice president and deputy chief economist.

The MBA said the 2.5% decline in purchase applications pushed the index to its lowest level in over a month. A 10% decrease in FHA applications partly prompted this drop. For the week ending July 21, the purchase index fell by 3% from one week earlier and was 23% lower than last year’s level on an unadjusted seasonal basis.

Kan added: “The decrease in FHA purchase applications contributed to an increase in the overall average purchase loan size to $432,700, its highest level since the end of this May.”

Refinancing applications remained lackluster — the index decreased 0.4% from the previous week and was 30% lower than the same week one year ago. Refi activity accounted for 28.7% of applications, up slightly from 28.4% last week.

At Mortgage News Daily, 30-year fixed-rate mortgage rates were at 7.04% on Wednesday morning, 17 basis point higher. At HousingWire’s Mortgage Rates Center, Optimal Blue had rates at 6.87% on Tuesday.

The Federal Housing Administration loans’ share increased to 12.7% from 13.6% the week prior. The U.S. Department of Veteran Affairs loans’ share remained unchanged at 12.1%. And the U.S. Department of Agriculture loans’ share also remained unchanged at 0.5%.

Adjustable-rate mortgages decreased to 5.9% of total loan applications last week, the MBA said. The average contract interest rate for 5/1 ARMs fell to 6.01% from 6.27% a week prior.

Observers expect the Federal Open Markets Committee to raise interest rates by 25 basis points on Thursday.