Mortgage Applications Decline Amid Rising Interest Rates

Mortgage applications experienced a decline last week, falling by 2.7% on a seasonally adjusted basis, as interest rates continued to rise. The Mortgage Bankers Association (MBA) reported that the Market Composite Index, which measures total mortgage loan application volume, saw this decrease for the week ending July 10. This downturn is attributed to the 30-year fixed mortgage rate reaching 6.65%, its highest point since August 2025.

Purchase applications, a key indicator for future home sales, were particularly affected, dropping 7% week-over-week. In contrast, refinance applications saw a 4% increase. This rise in refinancing was primarily driven by Federal Housing Administration (FHA) and Veterans Affairs (VA) loans, which increased by 9% and 10% respectively. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances rose from 6.58% to 6.65% according to MBA calculations. Freddie Mac reported slightly lower average 30-year rates at 6.49% for the week ending July 9, up from 6.43% the previous week.

The increase in borrowing costs has been influenced by geopolitical events, including the resumption of hostilities between the U.S. and Iran, which led to higher oil prices. Despite current elevated rates, the Realtor.com® midyear forecast projects a potential easing to around 6.3% by the end of 2026. The FHA's share of total applications increased to 17.7% from 16.4% the prior week, while the VA share edged up from 13% to 13.6%. The U.S. Department of Agriculture (USDA) share remained stable at 0.5%.