Mortgage rates keep inching higher and that has home loan demand largely stuck in place. The MBA's gauge of total applications moved up 0.8% last week. The average contract rate on a 30 year fixed for conforming loans rose to 6.79% from 6.78%, while the points on those 20%-down loans slipped to 0.65 from 0.66, a total that factors in the origination fee. The MBA's senior vice president and chief economist, Mike Fratantoni, said, "Mortgage rates reached their highest levels in four weeks as investors' concerns about inflation and growing deficits push yields higher across the globe."
Buyers showed a little more activity, with purchase applications up 2% on the week, though they were still 0.2% shy of last year's pace. One year ago, rates were 15 basis points lower. Refinancing lost ground, down 1% from the prior week and 19% below the same week a year earlier. Given current borrowing costs, most homeowners see little reason to refinance unless they're tapping home equity.
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"In many local markets, potential buyers have plenty of homes to choose, and this is likely supporting transaction volume," Fratantoni said. "Another trend we're monitoring is more borrowers choosing ARMs [adjustable-rate mortgages], with the ARM share back to 8 percent last week, its highest level in 5 weeks." ARMs can lock in an initial rate for up to 10 years, but they carry more risk because they reset to prevailing rates later. The average contract rate on a 5/1 ARM last week slipped to 5.94%. And the upward pressure on borrowing costs has not let up this week, with Mortgage News Daily noting rates hit their highest level since June 2025.
