Mortgage applications dropped 10.0% amid rising interest rates and post-holiday adjustments.
Refinance activity declined 7%, while purchase applications fell to their slowest pace since May.
Jumbo mortgage rates remained below conventional rates for the third consecutive week.
The U.S. housing market ground to a halt last week if mortgage applications are any indication. The Mortgage Bankers Association reports the number of people applying for mortgages plunged by 10% from the previous week.
There could be other factors that help explain the numbers. The decline followed an Independence Day holiday week, which typically disrupts normal mortgage application patterns. On an unadjusted basis, applications rebounded 13% compared to the previous week, reflecting some normalization after the holiday.
The Purchase Index, which reflects new home loan applications, declined 12% seasonally adjusted – the slowest pace since May – while the unadjusted index rose 11% week-over-week and remained 13% higher than the same period last year.
Meanwhile, the Refinance Index dropped 7% week-over-week. Still, refinance activity was 25% higher than the same week in 2024, suggesting longer-term gains despite short-term rate volatility.
“The increase in mortgage rates last week, driven by higher Treasury yields and concerns about economic impacts from tariffs, led to a slowdown in both purchase and refinance activity,” said Joel Kan, MBA’s vice president and deputy chief economist. “Jumbo rates being lower than conventional rates for a third week signals strategic shifts by some depository institutions toward balance sheet lending.”
Interest rates climbed across loan types
The rise in rates was evident across all major loan categories:
30-year fixed-rate mortgages (conforming): Increased to 6.82% from 6.77%.
30-year jumbo loans: Rose to 6.75% from 6.69%.
FHA-backed 30-year loans: Increased marginally to 6.52%.
15-year fixed-rate loans: Jumped to 6.16% from 6.04%.
5/1 adjustable-rate mortgages (ARMs): Increased to 6.08%, though the effective rate decreased due to lower points.
The refinance share of total mortgage activity ticked up to 41.1% from 40.0% the previous week. However, adjustable-rate mortgages saw a dip in demand, making up only 7.1% of total applications, down from 7.6%.