A for sale sign is posted in front of a condominium for sale in Los Angeles, California on July 9, 2026.
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Mortgage interest rates rose last week to their highest level since August 2025, denting homebuyer demand for loans. However, refinance demand increased.
Total mortgage applications fell 2.7% 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, increased by 0.64 points to 0.67 points and from 6.58% to 6.65% the previous week.
The number of applications for mortgage loans for home purchases decreased by 7% compared to the previous week, and by 2% compared to the same week last year. Buyers continue to struggle with soaring home prices and a lack of supply of affordable homes.
Mortgage refinance applications rose 4% for the week, and 7% more than the same week last year. Interest rates were only 17 basis points higher last year, so there isn’t much incentive for most borrowers to refinance. The percentage increase is likely because the pool of funds is much smaller to begin with and because some borrowers are doing cash-out refinances to take advantage of greater returns on home equity.
“Refinance applications increased despite increases in mortgage rates, driven by 9% and 10% increases in FHA and VA refinance applications, respectively,” Joel Kang, MBA’s vice provost and deputy chief economist, said in a release.
Refinances as a share of mortgage activity increased to 43.2% of total applications from 40.6% the previous week.
Mortgage rates have soared this week, according to a separate Mortgage News Daily survey.
“The main drivers of the recent rally are the rise in fuel prices in July and the fact that interest rates have not fallen below 6.52% in the past two months,” said Matthew Graham, chief operating officer at Mortgage News Daily. “In other words, we are already at a high level and higher fuel prices have only pushed interest rates higher.”
Interest rates then recovered slightly on Tuesday after inflation was much lower than expected.
