Mortgage rates finally fell slightly last week, but not enough to support the depressed mortgage market. Interest rates are rising due to economic instability caused by the Iran war, and homebuyers are hesitant. As a result, total mortgage applications fell 0.8% last week from 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 of $832,750 or less, including origination fees for loans with a 20% down payment, decreased by 0.65 points to 0.61 points and from 6.57% to 6.51%.
The number of applications for mortgages to buy homes increased by 1% for the week, but was down 7% from the same week last year. This was the first year-on-year decline since January 2025.
“However, certain loan types and geographic segments are doing better than others, due to lower interest rates on ARM and FHA loans and increased housing inventory in some regional markets,” MBA Economist Joel Kang said in a release. “FHA purchase applications increased 5% for the week, helped by FHA mortgage rates approximately 30 basis points lower than conventional mortgage rates.”
Mortgage refinance applications fell 3% for the week and 4% compared to the same week last year. This is also the first time since January 2025 that refinance amounts have decreased year-on-year.
“Last month’s sharp increase has frozen many potential refinance lenders. The pace of refinance applications is at its lowest level since December 2025,” Suga said.
Mortgage rates started this week essentially flat, but are likely to fall on Wednesday after President Donald Trump announced a two-week cease-fire on Tuesday night. The yield on 10-year U.S. Treasuries, which slowly follows mortgage rates, fell sharply on the news.
