Mortgage rates continued to climb for the sixth straight week, reaching the highest level since November 2023. That caused weekly demand to drop 6%, according to the Mortgage Bankers Association's seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $832,750 or less, increased last week to 7.30% from 7.12%, with points increasing to 0.75 from 0.73, including the origination fee, for loans with a 20% down payment. Refinance demand has been hit hardest, given that so few borrowers can now benefit at today's higher interest rates.
Applications to refinance a home loan dropped 9% for the week and were 56% lower than the same week one year ago.
The refinance share of mortgage activity decreased to 38.3% of total applications from 39.3% the previous week. "Government refinances declined 13 percent, with both FHA and VA applications experiencing double digit decreases over the week," said Joel Kan, an MBA economist in a release.
Applications for a mortgage to purchase a home fell 4% for the week and were 14% lower than the same week one year ago. Borrowers not only saw rates rise, but home prices are still seeing gains from a year ago, and, nationally at least, those gains are accelerating. Prices in July rose 1.9% nationally compared with July 2025, according to the S & P Cotality Case-Shiller index.
That is up from a 1.6% annual gain in June. Buyers are looking for savings anywhere they can find them, even in riskier mortgages. "ARM loans, with rates around 80 basis points lower than fixed rate loans, accounted for 10.3 percent of applications, the highest share since October 2025," said Kan.
Rates continued to move higher to start this week, with the average on the 30-year fixed hitting 7.58%, according to Mortgage News Daily.
That is the highest since November, 2023. "Mortgage rates moved higher again on Tuesday as the bond market continues recalibrating expectations for Fed policy, economic growth, and inflation," wrote Matthew Graham, chief operating officer at Mortgage News Daily. "The weakness is especially frustrating considering a fairly large drop in oil prices today, but rates have a lot more on their mind than oil these days."