Mortgage Rates Dip, Demand Plummets Further

Mortgage application volume experienced a weekly decrease of 1.%, even as interest rates edged lower. The average rate for a 30-year fixed-rate mortgage with a conforming loan balance dropped to 7.3% from 7.37% in the preceding week. This decline followed the Federal Reserve's decision to maintain its current stance on interest rates.

Demand for refinancing saw minimal change week-over-week but remains significantly depressed, with a 60% year-over-year drop. Higher rates compared to the previous year offer little incentive for homeowners to refinance. Home purchase applications also declined 2% weekly and 19% annually, indicating a continued freeze in the housing market.

In response to borrowing costs, a growing number of consumers are choosing adjustable-rate mortgages (ARMs). The average rate for a 5/1 ARM fell to 6.29%, leading to a higher share of ARMs in the market, the highest since September 2025. Mortgage rates saw a slight increase at the start of the current week, influenced by stronger-than-expected labor market data.