Two weeks ago, we saw a sudden surge in refinancing activity. The Mortgage Bankers Association (MBA) reported that, during the week ended August 9, its Refinancing Index soared by almost 35 percent, reaching its highest level in over two years, and refinancing represented nearly half of all mortgage applications that week. A bubble? Perhaps, but a short-lived one. The “bubble” didn’t pop this week, but it did deflate.  Even as mortgage rates eased for the third week, the volume of refinancing applications, as well as mortgage activity in general, retreated. The Market Composite Index, MBA’s measure of m application volume, decreased 10.1 percent on a seasonally adjusted basis.  On an unadjusted basis, the Index was down 11.0 percent compared with the previous week.   The Refinance Index plunged by 15.0 percent compared to the previous week but was still 90 percent higher than the same week one year ago. The refinance share of mortgage activity decreased to 46.3 percent of total applications from 48.6 percent. [refiappschart] The seasonally adjusted Purchase Index was 5.0 percent lower than the prior week and was down 7.0 percent on an unadjusted basis. Purchase applications were 8.0 percent below those in the same week in 2023. [purchaseappschart] “Both mortgage rates and mortgage applications have now stabilized after a few weeks of financial market volatility, which led to a quick drop in mortgage rates. The 30-year fixed mortgage rate declin(ed) for the third consecutive week to 6.5 percent, the lowest since May 2023,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The level of refinance applications remains 23 percent higher than a month ago and the past two weeks have seen the strongest weekly readings since 2022, as borrowers have sought lower rates . FHA refinance applications bucked the trend and increased for the sixth straight week.”