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Mortgage Applications Tick Up in July as Rates Ease Slightly

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Mortgage application activity picked up in July as interest rates eased modestly. The Mortgage Bankers Association’s (MBA) Market Composite Index, which tracks mortgage application volume, rose 2.4% from June on a seasonally adjusted basis. Compared to July 2024, total applications were up 24.5%.

The average contract rate for 30-year fixed mortgages edged down by 4 basis points to 6.8%. While refinancing increased by 7.4%, purchase applications slipped 1.2% as high home prices and mortgage rates continued to keep homebuyers on the sideline. Year-over-year, the 30-year rate was 6 basis points lower, with purchase and refinance applications up 19.6% and 32.2%, respectively.

Loan sizes continued to trend downward for the third consecutive month. The average loan amount across all loan types declined 1.7% to $376,500. Purchase loan sizes fell 2.5% to $428,800, while refinance loans increased 3.0% to $299,300. Adjustable-rate mortgage (ARM) loan sizes saw the largest decline among all loan types, falling 6.6% to $957,500 from $1.03 million.   

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Mortgage Rates Decline in July; Treasury Yields Rise Mid-Month

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Average mortgage rates dipped in July, according to Freddie Mac. The average 30-year fixed-rate mortgage was 6.72%, 10 basis points (bps) lower than June. Meanwhile, the 15-year rate declined 9 bps to average at 5.86%. Compared to a year ago, the 30-year rate is down 13 basis points (bps), and the 15-year rate is 28 bps lower.

The 10-year Treasury yield, a key benchmark for long-term borrowing, averaged 4.37% in July – a 6 bps decline from the previous month. Yields began the month lower but reversed course and rose steadily as investor expectations solidified that the Federal Reserve would maintain its current policy stance. These expectations were driven by economic data showing an uptick in inflation while the economy and labor market remained solid.

On July 30, the Federal Open Market Committee (FOMC) solidified market expectations by voting to keep the federal funds rate unchanged at 4.25% to 4.50%. However, just days later, the July employment report released by the Bureau of Labor Statistics on Friday, August 1, showed downward revisions to job gains in May and June. In response, yields fell to around 4.2% as investors perceived an increased likelihood of a rate cut at the Fed’s next meeting in September.

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Mortgage Applications Picked Up in June as Rates Eased

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Mortgage application activity picked up in June, supported by a slight decline in interest rates. The Mortgage Bankers Association’s (MBA) Market Composite Index, which tracks mortgage application volume, rose 5.4% from May on a seasonally adjusted basis. Compared to June 2024, total applications were up 21.1%.

The average contract rate for 30-year fixed mortgages edged down by 4 basis points to 6.86%. In response, purchase applications increased 3.7% month-over-month, while refinance activity climbed 6.5%. On a year-over-year basis, the 30-year rate was 12 basis points lower, with purchase and refinance applications up 15.2% and 30.3%, respectively.

Loan sizes continued to trend lower. The average loan amount across all loan types declined 2% to $383,000. Purchase loans edged down 0.9% to $439,800, and refinance loans decreased 1.8% to $290,500. Adjustable-rate mortgage (ARM) loan sizes dropped 3.1% to $1.03 million. 

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Mortgage Rates Hold Steady Despite Modest Uptick in Treasury Yield

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Average mortgage rates were flat in June, according to Freddie Mac. The average 30-year fixed-rate mortgage held at 6.82%, while the 15-year stayed at 5.95%. Compared to a year ago, the 30-year rate is down 10 basis points (bps), and the 15-year rate is 24 bps lower.

The 10-year Treasury yield, a benchmark for long-term borrowing, averaged 4.43% in June – a marginal increase of 5 bps from the previous month. However, the most recent weekly yield saw a small decrease following Federal Reserve Chair Jerome Powell’s congressional testimony, where he noted the possibility of a rate cut being “sooner rather than later” if inflation remains contained. Nonetheless, he reiterated the Fed’s “wait and see” stance, citing ongoing uncertainty around how changes in trade, immigration, fiscal, and regulatory policies will affect the economy.

Last week, the Federal Open Market Committee (FOMC) continued its pause on rate cuts, keeping the federal funds rate unchanged at 4.25% to 4.5%. The updated dot plot continues to signal a cumulative rate cut of 50 bps by the end of 2025. However, the latest Summary of Economic Projections revised the median 2025 GDP forecast down from 1.7% to 1.4%. Forecasts for unemployment (4.4% to 4.5%), PCE inflation (2.7% to 3.0%), and core PCE inflation (2.8% to 3.1%) were all revised upward.

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Mortgage Applications Dip in May amid Refinance Slowdown

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Mortgage loan applications declined in May, driven by a drop for refinancing activity. According to the Mortgage Bankers Association (MBA) weekly survey, the Market Composite Index, which measures mortgage application volume, fell 5.5% month-over-month on a seasonally adjusted (SA) basis. Despite the monthly dip, application volume remains 23.7% higher than in May 2024.

The average 30-year fixed mortgage rate rose for the second consecutive month, climbing 10 basis points to 6.9%. Purchase activity remained resilient, posting a modest 1.3% monthly gain from the previous month, while the Refinance Index declined 13.7% (SA). Compared to a year ago, mortgage rates are still 18 basis points lower, with purchase and refinance applications up 15.8% and 39.8%, respectively.

Average loan sizes also declined. In May, the average loan amount for the overall market, which includes purchases and refinances, declined 3.1% to $390,800. Purchase loan sizes stayed flat at $443,600, while refinance loan sizes dropped 12.8% to $296,000. The average size for adjustable-rate mortgages (ARMs) ticked up 0.5%, from $1.05 million to $1.06 million.

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Treasury Yield Increase Drives Mortgage Rates Higher in May

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Mortgage rates continued their upward trend in May due to market volatility triggered by fiscal concerns and weaker U.S. Treasury demand. According to Freddie Mac, the average 30-year fixed-rate mortgage rose to 6.82% — a 9-basis-point (bps) increase from April. The 15-year fixed-rate mortgage increased by 5 bps to 5.95%.

The 10-year Treasury yield, a benchmark for mortgage rates, averaged 4.38% in May, with the most recent weekly yield surpassing 4.50%. Long-term treasury yields spiked following two events: first, a credit rating downgrade by Moody’s Ratings, and then, a tepid auction of the 20-year treasury. The weak demand for long-term government bonds necessitated a higher yield to attract investors.

At the core of the market unease is concern over the growing fiscal deficit that intensified as the new “One Big Beautiful Bill” threatens to further widen the federal deficit, which stood at $1.9 trillion as of January 2025. The combination of weakening fiscal credibility and poor auction performance suggests a possible upward repricing of long-term borrowing costs.

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Mortgage Activity Levels Off in April as Rates Increase

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Mortgage loan applications saw little change in April, as refinancing activity decreased. The Market Composite Index, which measures mortgage loan application volume based on the Mortgage Bankers Association (MBA) weekly survey, experienced a 0.4% month-over month increase on a seasonally adjusted (SA) basis. However, year-over-year, the index is up 29.3% compared to April 2024.

The average rate for a 30-year fixed mortgage climbed 10 basis points in April, reaching 6.8%, according to the MBA survey. As rates edged higher, purchase activity posted a modest 1.9% month-over-month gain (SA), while the Refinance Index declined by 1.4% (SA). Compared to a year ago, mortgage rates are down 37 bps, and thus, purchase applications are higher by 11.2%, while refinance activity has jumped 62.0%.

Loan sizes remained relatively stable. In April, the average loan size across the total market (including purchases and refinances) held steady at $403,500, month-over-month, on a non-seasonally adjusted basis (NSA). Purchase loans sizes edged down 1.3% to $444,000, while refinance loan sizes increased 0.5% to $339,300. Notably, the average loan size for adjustable-rate mortgages (ARMs) fell 7.8%, from $1.14 million to $1.05 million.

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April Mortgage Rates Edge Up Following Treasury Sell-Off

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Mortgage rates edged up slightly in April, with the average 30-year fixed-rate mortgage settling at 6.73%, according to Freddie Mac. This marks an 8-basis-point (bps) increase from March. The 15-year fixed-rate mortgage increased by 7 bps to 5.90%.

The uptick in mortgage rates followed a sell-off in U.S. Treasury securities, driven by concerns surrounding the ongoing trade war. As demand for Treasuries declined, prices fell and yields rose. The 10-year Treasury yield averaged 4.28% in April, with the most recent weekly yield rising to 4.34%. The sell-off signals a potential loss of investor confidence in what is typically considered a safe-haven asset.

In response to rising yields, the president has pressured Federal Reserve Chair Jerome Powell to cut interest rates. However, at the recent Economic Club of Chicago, Chairman Powell stated that “tariffs are highly likely to generate at least a temporary rise in inflation” and emphasized the Fed’s obligation to price stability, adding that it must ensure “a one-time increase in the price level does not become an ongoing inflation problem”.

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Refinancing Continues to Drive Mortgage Activity in March

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The Market Composite Index, which measures mortgage loan application volume based on the Mortgage Bankers Association (MBA) weekly survey, rose 14.0% month-over-month on a seasonally adjusted (SA) basis, driven primarily by a surge in refinancing activity. Year-over-year, the index is up 29.2% compared to March 2024.

The Purchase Index rebounded 8.3% (SA) from the previous month as mortgage rates declined. Meanwhile, the Refinance Index surged 22.2% (SA), continuing its strong upward trend. Compared to a year ago, purchase applications are up 7.6%, while refinance activity has jumped 72.9%.

Economic uncertainty continues to drive treasury yield volatility, impacting mortgage rates. In March, the average 30-year fixed-rate mortgage reported in the MBA survey fell 17 basis points (bps) to 6.7%, marking a 23 bps decline from a year ago.

Loan sizes have continued to rise since the start of the year. In March, the average loan size across the total market (including purchases and refinances) increased 3.5% month-over-month (NSA) to $403,300. For purchase loans, the average size edged up 0.9% to $450,000, while refinance loans saw a sharper increase of 10.4%, reaching $337,500. Meanwhile, the average loan size for adjustable-rate mortgages (ARMs) rose slightly by 1.1%, from $1.13 million to $1.14 million.

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Mortgage Rates Hold Steady After Early March Drop

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Mortgage rates dropped significantly at the start of March before stabilizing, with the average 30-year fixed-rate mortgage settling at 6.65%, according to Freddie Mac. This marks a 19-basis-point (bps) decline from February. Meanwhile, the 15-year fixed-rate mortgage fell by 20 bps to 5.83%.

The drop in long-term borrowing costs was driven by a 24-bps decline in the 10-year Treasury yield, which averaged 4.28% in March. This decline provided a boost to the housing market—new home sales increased 5.1% year-over-year in February, while the participation of first-time homebuyer of existing homes rose 26% over the same period. However, existing home sales saw a slight dip from last February.

The decrease in Treasury yields reflects growing concerns about an economic slowdown, particularly as shifts in tariff policy weaken consumer confidence. Despite this, the labor market remained resilient in February, posting steady job gains even as the unemployment rate ticked up slightly. The strength of upcoming jobs reports will be critical in assessing whether recession risks are intensifying.

At the latest FOMC meeting, the Federal Reserve held interest rates steady but revised its 2025 economic projections: expected GDP growth was lowered to 1.7% (down from 2.1% in December 2024) and the projected unemployment rate was raised to 4.4%, up 0.1 percentage point from previous estimates.

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