Mortgage rates dip slightly as demand declines: Insights from the MBA
Shreeaa Rathi | Jun 04, 2025, 22:51 IST
( Image credit : AP, TOIGLOBAL )
Last week, mortgage rates nudged down slightly, yet the appetite for new home loans weakened. Despite a dip in applications for both purchases and refinances, the number of purchase applications remained higher than this time last year. The average rate for 30-year fixed mortgages now sits at 6.92%.
Mortgage rates saw a slight decrease last week, yet overall mortgage demand experienced a drop, according to the Mortgage Bankers Association (MBA). Applications for both home purchases and refinances declined, despite purchase applications being higher than a year ago. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 6.92% from 6.98%, but this did little to stimulate the market. Market observers are now looking towards the upcoming monthly employment report for potential future movement.
Total mortgage application volume decreased by 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 remained relatively stable for the past two months.
Applications to refinance a home loan, which typically react more sensitively to weekly rate changes, also fell by 4% for the week. However, refinance applications were 42% higher than the same week one year ago.
Last year at this time, rates were 15 basis points higher.
\"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 also experienced a decrease of 4% for the week. Despite this weekly dip, purchase applications were 18% higher than the same week one year ago.
The spring homebuying season has been slower than expected. Closed sales continue to lag behind last year's figures, even with increased mortgage demand.
An increase in housing supply is considered a primary factor influencing purchase demand. The current level of supply is the highest it has been in five years.
Despite the increased supply, sales have not yet reached the levels expected.
Mortgage rates began the current week with little change.
The market is anticipating the release of the monthly employment report on Friday, which could trigger the next significant shift in rates.
Total mortgage application volume decreased by 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 remained relatively stable for the past two months.
Applications to refinance a home loan, which typically react more sensitively to weekly rate changes, also fell by 4% for the week. However, refinance applications were 42% higher than the same week one year ago.
Last year at this time, rates were 15 basis points higher.
\"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 also experienced a decrease of 4% for the week. Despite this weekly dip, purchase applications were 18% higher than the same week one year ago.
The spring homebuying season has been slower than expected. Closed sales continue to lag behind last year's figures, even with increased mortgage demand.
An increase in housing supply is considered a primary factor influencing purchase demand. The current level of supply is the highest it has been in five years.
Despite the increased supply, sales have not yet reached the levels expected.
Mortgage rates began the current week with little change.
The market is anticipating the release of the monthly employment report on Friday, which could trigger the next significant shift in rates.