Mortgage Applications Decline as Rates Hit Near-Year High

Mortgage applications decreased last week, with the average rate for a 30-year fixed mortgage reaching 6.65%, the highest level observed since August 2025. This increase in borrowing costs, as reported by the Mortgage Bankers Association (MBA) in their weekly survey for the week ending July 10, 2026, led to a decline in purchase applications. The seasonally adjusted purchase index fell by 7% compared to the previous week, and on an unadjusted basis, it was 2% lower than the same week in the prior year. This data follows an adjustment for the Fourth of July holiday, which had previously boosted activity.

Despite the downturn in purchase applications, refinance applications saw a modest increase of 4% from the previous week, and were 7% higher than the same week in 2025. This rise in refinancing was notably driven by FHA and VA refinance applications, which increased by 9% and 10% respectively. The overall refinance share of mortgage activity grew to 43.2% of total applications, up from 40.6% in the preceding week. The share of adjustable-rate mortgages (ARMs) decreased to 7.1% of total applications.

Specific loan types showed shifts in their share of the market. The Federal Housing Administration (FHA) share of total applications rose to 17.7% from 16.4% the week before. Similarly, the U.S. Department of Veterans Affairs (VA) share increased to 13.6% from 13.0%. The U.S. Department of Agriculture (USDA) share remained stable at 0.5%. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, defined as $832,750 or less, climbed to 6.65% from 6.58%. Rates for jumbo loan balances, exceeding $832,750, also saw an increase, reaching 6.62% from a previous figure.

Joel Kan, MBA’s vice president and deputy chief economist, commented on the trends, stating that purchase applications declined as the 30-year fixed rate rose to its near-year high. He noted that despite higher rates, refinance applications increased, particularly those from FHA and VA borrowers. The overall decline in mortgage applications suggests that higher interest rates are a significant factor influencing borrower behavior in the housing market.