A For Sale sign sits in front of a home on May 12, 2025 in Miami, Florida.
Joe Raedle | Getty Images
Mortgage rates fell slightly last week, but that did nothing to spur mortgage demand. Total mortgage application volume dropped 3.9% last week compared with the previous week, 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, $806,500 or less, decreased to 6.92% from 6.98%, with points falling to 0.66 from 0.67, including the origination fee, for loans with a 20% down payment. Rates have really moved in a very narrow range for the last two months.
Applications to refinance a home loan, which are most sensitive to weekly rate moves, still declined 4% for the week but were 42% higher than the same week one year ago. Last year at this time, rates were 15 basis points higher, so not a huge difference, but the volumes are so low to begin with that it doesn’t take much to move the needle.
“Refinance activity fell across both conventional and government segment and the overall average refinance loan size was the smallest since July 2024, as potential borrowers hold out for larger rate drops,” said Joel Kan, an MBA economist in a release.
Applications for a mortgage to purchase a home fell 4% for the week, but were 18% higher than the same week one year ago. The spring season has been sluggish to say the least, with closed sales still coming in lower than last year, despite mortgage demand now being higher. The main driver of increased purchase demand is simply more supply on the market. Given how much more there is, however, the highest level in five years, sales should be even stronger.
Mortgage rates started this week pretty flat. The next big move could come Friday, when the all-important monthly employment report is scheduled for release.
