In the latest Mortgage Bankers Association (MBA) Weekly Mortgage Applications Survey, mortgage applications decreased by 2.6 percent from the previous week, with the Market Composite Index showing a corresponding 2.6 percent drop in mortgage loan application volume. The Refinance Index also saw a 2 percent decline, although it remained 25 percent higher than the same week last year. At the same time, the seasonally adjusted Purchase Index decreased by 3 percent from the previous week.
Joel Kan, MBA’s Vice President and Deputy Chief Economist, attributed the decrease in mortgage applications to lower average mortgage rates, driven by financial market volatility due to geopolitical conflicts and ongoing tariff uncertainties. The 30-year fixed rate fell to 6.84 percent, its lowest level since April, but despite this decrease, potential homebuyers appeared hesitant to make purchase decisions amid economic uncertainty.
Refinance activity declined for both conventional and government borrowers, with the exception of VA applications, which saw a 2 percent increase in purchase applications and a slight uptick in refinance applications. Additionally, the average loan size dropped to $380,200, the lowest since January 2025.
The decline in mortgage applications comes at a time when mortgage rates have hit a four-month low, prompting concerns about the mismatch between lower rates and reduced buyer interest. According to experts, the drop in applications could be a result of various factors, including economic uncertainty, geopolitical tensions, and ongoing trade disputes affecting consumer confidence and willingness to commit to large financial decisions like buying a home.
Despite the decline in mortgage applications, purchase activity remains higher than the previous year, with a 14 percent increase in purchase applications compared to the same week last year. While the purchase application activity is still below pre-pandemic levels, it has shown resilience compared to the lows experienced during the housing bust in 2023.
The refinance index also remains low, indicating that homeowners may be less inclined to refinance their mortgages despite the lower rates. Overall, the mortgage market appears to be influenced by a complex interplay of economic factors, including interest rates, geopolitical tensions, and consumer sentiment, which are likely to continue shaping the trajectory of mortgage applications in the coming weeks.
In conclusion, the recent decline in mortgage applications amidst lower rates and economic uncertainty underscores the impact of external factors on consumer behavior in the housing market. While lower rates may incentivize some buyers, broader economic conditions and geopolitical uncertainties are creating a cautious environment for potential homebuyers and refinancers.
References:
1. “MBA: Mortgage Applications Decrease in Latest MBA Weekly Survey” Calculated Risk, [https://www.calculatedriskblog.com/2025/06/mba-mortgage-applications-decrease-in_06928920.html]
2. “Why Mortgage Applications Are Dropping Even As Rates Hit 4-Month Lows” Money Talks News, [https://www.moneytalksnews.com/why-mortgage-applications-are-dropping-even-as-rates-hit-month-lows/]
