The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances rose to 6.78% last week, marking the highest level in three weeks and up from 6.77% the previous week, according to the Mortgage Bankers Association (MBA) [1]. This increase in rates contributed to a further weakening in mortgage demand, with total mortgage application volume dropping 1% from the prior week on a seasonally adjusted basis [1].
Refinance applications, which are particularly sensitive to rate changes, fell 2% for the week and were 17% lower than the same week one year ago, when rates were 9 basis points lower [1]. Joel Kan, vice president and deputy chief economist at the MBA, noted that refinance applications decreased notably for FHA and VA loans, and the average loan size for refinances reached its lowest point since June 2025 [1].
Applications for home mortgages to purchase a home declined 0.3% for the week and were 5% lower compared to the same week last year [1]. Kan added that purchase activity was down, driven by a 7% decrease in FHA applications, and that the purchase market has slowed over the past two months [1]. Despite higher rates, fewer buyers are using all cash, and less competition in the market is making sellers more likely to accept buyers who require financing, according to a separate report from Realtor.com [1].
Looking forward, mortgage rates have moved lower this week, as reported by Mortgage News Daily, with rates dropping on Tuesday due to falling oil prices. Matthew Graham, chief operating officer at Mortgage News Daily, attributed the decline in oil prices to news reports suggesting progress in the peace process via Pakistani mediators, which led to a sharp drop in bond yields that correlate with mortgage rates [1].
CONCLUSION
Rising mortgage rates have led to a continued decline in both refinance and purchase applications, signaling ongoing weakness in housing demand. However, recent drops in oil prices and bond yields may provide some relief for mortgage rates in the near term. The market remains cautious as higher rates and reduced activity persist.