Mortgage refinance applications fall to half of last year as rates climb to three-year high
Average rates on 30-year fixed mortgages rose to 7.49%, prompting an 8% weekly drop in refinance applications and a 2% decline in purchase applications, according to the Mortgage Bankers Association.
Mortgage rates climbed to the highest level in nearly three years, with the average contract rate for 30-year fixed loans on conforming balances reaching 7.49% last week, up from 7.30% the prior week. The Mortgage Bankers Association reported that total mortgage application volume fell 4.2% week-over-week.
Refinance applications, which are highly sensitive to rate changes, declined 8% and are now 56% lower than the same week a year earlier. > "Very few homeowners have an incentive to refinance at these rates," said Joel Kan, an economist with the MBA, adding that refinance activity is at its lowest level since 2025 and has dropped to less than half of last year's pace.
Applications for home purchases slipped 2% and are 15% below the same period last year. Kan noted that purchase activity fell across all loan types, with FHA applications down 6%, and that a larger share of borrowers are choosing adjustable-rate mortgages, which remained at 10.3% of applications.
Adjustable-rate mortgages, while offering lower initial rates, carry the risk of future rate adjustments. During the early pandemic, the share of ARM applications was under 3%.
A separate survey from Mortgage News Daily indicated that rates eased slightly to 7.56% for the average lender, still near the highest since 2003. > "What gives? Is this a sign that recent upward momentum is starting to wane?" wrote Matthew Graham, chief operating officer at Mortgage News Daily, describing the recent pattern as a potential "double top" that analysts watch for momentum shifts.