Mortgage Demand Stalls as Higher Rates Keep Buyers and Homeowners on the Sidelines
Mortgage demand was essentially flat last week as borrowing costs remained elevated, giving both prospective homebuyers and existing homeowners little reason to make a move.
Total mortgage application volume fell just 0.4% from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for a 30-year fixed-rate mortgage with a conforming loan balance of $832,750 or less held steady at 6.77%. Points, including the origination fee, edged down to 0.65 from 0.67 for borrowers making a 20% down payment.
Although rates were unchanged during the week, they remain near the higher end of their recent range, continuing to put pressure on housing affordability.
Homebuyer demand slips
Applications for mortgages to purchase a home fell 2% from the previous week and were 3% lower than the same week last year.
That decline suggests that elevated borrowing costs are still influencing when buyers choose to enter the market.
“Affordability difficulties have reemerged as a reason for homebuyers to delay purchase decisions given the impact of higher mortgage rates on monthly mortgage payments,” said Joel Kan, vice president and deputy chief economist at the MBA.
For buyers already facing high home prices, even small changes in mortgage rates can significantly affect monthly payments and purchasing power. That can lead some households to postpone buying, look for less expensive homes or wait for more favorable financing conditions.
Refinancing Remains Limited
Refinancing activity provided a small bright spot, with applications rising 2% for the week.
However, refinance demand remained 18% below the same week last year, when mortgage rates were slightly lower.
Kan noted that borrowers with larger loan balances are particularly reluctant to refinance while rates remain elevated. The average refinance loan size fell to $282,200, its lowest level since June 2025.
“Mortgage rates and applications changed little last week,” Kan said, noting that conventional and VA refinance activity increased slightly while FHA refinancing declined.
Rates are moving higher again
The stability in mortgage demand may not last.
Mortgage rates moved slightly higher at the start of this week, according to a separate survey from Mortgage News Daily.
That renewed upward movement could add another layer of pressure to a housing market already dealing with affordability challenges.
For now, the message is fairly clear: buyers are still watching rates closely, while homeowners have limited incentive to refinance. Unless borrowing costs fall meaningfully, mortgage demand may continue to struggle to gain momentum.
