Mortgage applications to purchase a home declined 3% last week compared with the previous week, according to the Mortgage Bankers Association’s (MBA) seasonally adjusted index. Despite this weekly drop, application volume remained 14% higher than the same week last year.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances (up to $806,500) fell to 6.84% from 6.93%, marking its lowest level since April. Points, which include origination fees for loans with a 20% down payment, increased slightly to 0.66 from 0.64. The rate was just 10 basis points lower than at this time last year.
Joel Kan, MBA’s vice president and deputy chief economist, attributed the decrease in rates to financial market volatility triggered by ongoing geopolitical conflicts and tariff uncertainties. However, he noted that despite lower rates, applications dropped as economic uncertainty weighed on potential homebuyers.
Refinance Activity Also Slows
Applications to refinance a home loan, typically sensitive to interest rate changes, fell 2% last week despite the rate drop. However, refinancing activity was still 25% higher than the same week a year ago.
Kan pointed out that both conventional and government refinancing applications declined, but VA (Veterans Affairs) purchase and refinance applications bucked the trend with slight increases. The average loan size fell to $380,200, the lowest since January 2025.
Mortgage rates remained relatively steady at the start of the week despite several economic reports. Experts are awaiting the Federal Reserve’s announcement on interest rates, expected to influence market movements.
Matthew Graham, chief operating officer at Mortgage News Daily, explained that while there is no chance of a rate cut, the focus will be on other details provided by the Fed, especially the “dot plot”—a chart showing Fed members’ rate expectations over the next few years—which carries significant weight with investors.
What The Author Thinks
The recent dip in mortgage rates might look promising on paper, but it’s clear that economic uncertainty remains a dominant factor holding back homebuyer enthusiasm. Lower rates alone can’t overcome concerns about job security, inflation, and market volatility. Until buyers feel more confident about their financial futures, demand will likely stay subdued despite cheaper borrowing costs. The housing market is as much a reflection of consumer sentiment as it is of interest rates, and right now, sentiment is shaky.
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