Key facts
- 30-year conforming mortgage rates averaged 6.86%, down 5 basis points week-over-week.
- Mortgage applications increased by 3.6% for the week ending August 7.
- Delinquency rates for FHA and VA loans saw year-over-year increases in the second quarter.
- Serious delinquency for FHA borrowers reached 2.06% in Q2 2026.
- Veterans and service members surveyed are more optimistic about homeownership and report less financial stress than civilians.
Mortgage rates have seen a second consecutive week of decline, with 30-year conforming loans averaging 6.86%. This decrease has spurred a 3.6% rise in mortgage applications, according to the Mortgage Bankers Association (MBA). However, the relief is tempered by persistent affordability challenges, with rates remaining near yearly highs.
Despite a slight decrease in the median monthly mortgage payment and growth in household earnings, stress is evident in some servicing portfolios, particularly for FHA and VA loans. Year-over-year, delinquency rates for these government-backed loans have increased, with serious delinquencies for FHA borrowers reaching 2.06% in the second quarter of 2026. Experts suggest that some of this rise is linked to new loss-mitigation plans and a return to more stringent requirements post-COVID.
Market metrics show a mixed picture, with a modest increase in housing inventory and new listings, but a slight dip in pending sales and mortgage application demand compared to last year. For many first-time buyers, the primary barrier remains the substantial down payment required, rather than interest rate fluctuations. Data from Veterans United Home Loans indicates that veterans and service members are more optimistic about homeownership and report lower financial stress than their civilian counterparts, with a higher intention to purchase in the near future.