Mortgage Applications Increase as Interest Rates Decline

A recent decrease in interest rates led to an increase in mortgage demand. Total mortgage application volume rose 9.4% last week compared to the previous week, according to the Mortgage Bankers Association's seasonally adjusted index. The results for last week included an adjustment for the July Fourth holiday.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) decreased to 6.77% from 6.79%. Points remained at 0.62, including the origination fee, for loans with a 20% down payment. This was the lowest average rate in three months.

• Applications to refinance a home loan increased by 9% for the week and were 56% higher than the same week one year ago.
• Applications for a mortgage to purchase a home also increased by 9% for the week and were 25% higher than the same week one year ago.

"Homebuyer demand is being influenced by increasing housing inventory and slower home-price growth," said Joel Kan, vice president and deputy chief economist at the MBA. "The average loan size on a purchase application, at $432,600, was at its lowest since January 2025."

Purchase mortgage demand has historically followed trends in home sales, but current market conditions include several atypical factors. Consumer sentiment is variable, and contract cancellation rates have been high for both new and existing homes. Pending sales, which represent signed contracts, have not increased at the same rate as mortgage demand.

Mortgage rates began to increase again just before the July Fourth holiday and have continued to rise this week, according to a separate survey from Mortgage News Daily. This may not necessarily indicate a sustained upward trend.

"We often observe some movement in the opposite direction after a consistent trend. June saw such a trend, bringing rates to their lowest levels in several months," wrote Matthew Graham, chief operating officer of Mortgage News Daily. "Except for the last few days of June, today's rates are still the lowest since late April."