Tuesday, May 19, 2026 at a residence in Daly City, California, USA.
Jason Henry | Bloomberg | Getty Images
Despite a temporary reprieve from rising interest rates, demand for mortgages fell further.
Total mortgage applications fell 5.3% 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 decreased last week from 0.83 to 0.75 points, including the 20% down payment loan origination fee, and from 7.50% to 7.41%.
“Mortgage rates have fallen for the first time in two months,” MBA Economist Joel Kang said in the release. “However, lower interest rates were not enough to drive application activity, as both purchase applications and refinance applications continued to decline.”
Applications for refinancing mortgages, which are most sensitive to weekly changes, were down just 2% from the previous week, which was smaller than the previous week when interest rates were rising. Refinance demand remained 59% lower than the same week last year. With current interest rates more than 1 percentage point higher than a year ago, very few borrowers can benefit from refinancing.
The number of applications for mortgages to buy homes fell by 7% for the week and by 18% from a year earlier. Buyers are responding to increases in overall levels rather than weekly interest rate movements. Pending home sales decreased significantly in September, according to a report released Tuesday by the National Association of Realtors. These were measured by contracts signed, so they showed the real-time impact of interest rate increases during the month. Interest rates remained at that high level in October.
For these buyers in the market, a high share continues to choose adjustable rate mortgages (ARMs). ARMs offer lower interest rates but are considered riskier because they ultimately reset to the market rate at the end of the term.
“ARM share remained stable at 10.5% as ARM interest rates remained nearly 1 percentage point lower than 30-year fixed rates, giving eligible borrowers a lower rate option to purchase a home,” Kang added.
Mortgage rates aren’t having much of an impact this week, according to a separate Mortgage News Daily survey. Last week was a particularly volatile week for interest rates due to multiple monthly inflation reports. This week’s movements appear to be tracking oil prices.
“However, we would caution against putting too much weight into the correlation between oil prices,” said Matthew Graham, chief operating officer at Mortgage News Daily. “It has been extremely unreliable for over a month.”
Correction: The National Association of Realtors on Tuesday reported pending home sales for September. The previous version had an error in the description of that day.
