Rising Mortgage Rates Drive 18% Collapse in Refinance Applications
Mortgage application volume dropped 8.5% this week, driven by an 18% collapse in refinance demand as the 30-year fixed rate climbed to its highest point since August 2025.
The average contract rate on 30-year conforming mortgages rose to 6.65% from 6.56%, with points increasing to 0.65 from 0.60 for loans with a 20% down payment, per the Mortgage Bankers Association.
Refinance applications took the hardest hit, falling 18% for the week and dropping to their lowest share since June 2025 at just 38% of total volume.
The decline spread across every loan type. MBA deputy chief economist Joel Kan cited "large declines in applications across loan types" in the weekly release. Conventional refinances fell 14%, FHA applications dropped 18%, and VA applications declined 34%.
Despite the weekly pullback, refinance volume remained 19% higher than the same week in 2025, when the 30-year fixed rate ran 33 basis points above current levels — making the year-over-year comparison look better than the trend feels.
Purchase Market Holds, But Barely
Purchase applications slipped just 0.4% for the week and sat only 5% above year-ago levels, a narrow margin heading into the heart of spring buying season, per the MBA data.
The average loan size for a purchase application hit a new survey high at $473,600.
Smaller-balance borrowers pulled back the most, with Kan noting the rate environment's "negative impact on their purchasing power" as the main driver of that retreat.
That split with larger-balance buyers sustaining activity while entry-level demand erodes, suggests affordability stress is concentrated at the lower end of the market.
The prior week had already signaled the direction. Total applications fell 2.3% for the week ending May 15 as the 30-year fixed rate crossed 6.56% for the first time in nearly two months, per HousingWire, foreshadowing last week's steeper decline.
Conforming loan balances are capped at ~$832.75K, and with rates now at a nine-month high, homeowners who locked in lower rates in recent years have little financial reason to refinance.
The spring market is losing its seasonal tailwind precisely when buyers and sellers need it most.