Mortgage rates finally ticked a tiny bit lower last week, but not enough to help the ailing mortgage market. Economic uncertainty, fueled by the Iran war, is keeping rates elevated and homebuyers on the fence. As a result, total mortgage application volume fell 0.8% last week compared with 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, $832,750 or less, decreased to 6.51% from 6.57%, with points decreasing to 0.61 from 0.65, including the origination fee, for loans with a 20% down payment.
Applications for a mortgage to purchase a home rose 1% for the week but were 7% lower than the same week one year ago. That was the first year-over-year decline since January 2025.
“However, certain loan types and geographic segments are faring better than others because of lower rates on ARM and FHA loans as well as growing housing inventory in some local markets,” said Joel Kan, an MBA economist in a release. “Applications for FHA purchase applications were up 5 percent over the week, supported by the FHA mortgage rate being about 30 basis points lower than the conventional mortgage rate.”
