Lower Rates Support Home Purchase Activity
U.S. mortgage demand was essentially unchanged last week, but purchase applications continued to outperform last year’s pace as modestly lower borrowing costs and improving housing supply encouraged more prospective buyers to enter the market.
The Mortgage Bankers Association reported that its seasonally adjusted Market Composite Index–a broad measure of mortgage application activity–edged up 0.04% for the week ended June 26, 2026. While overall application volume was little changed, purchase activity strengthened enough to offset a slight decline in refinancing demand.
Applications to purchase homes rose 1% from the previous week on a seasonally adjusted basis and were 3% higher than the same week a year earlier. On an unadjusted basis, purchase applications jumped 11% week over week, reflecting both seasonal factors and the prior week’s adjustment for the Juneteenth holiday.
Refinancing activity moved in the opposite direction, slipping 1% from the prior week. Even so, refinance applications remained 9% above year-earlier levels as some homeowners continued to take advantage of mortgage rates that have eased modestly in recent weeks.
Joel Kan
Joel Kan, the MBA’s Vice President and Deputy Chief Economist, said declining oil prices helped push mortgage rates slightly lower, providing enough relief to keep homebuyers engaged despite elevated financing costs.
Kan noted that purchase applications have now posted year-over-year gains for nearly three consecutive months, suggesting buyers are responding to a housing market characterized by improving inventory levels and slower home-price appreciation in many regions.
The average rate on a conforming 30-year fixed-rate mortgage fell to 6.57% from 6.59% a week earlier. Rates on 15-year fixed mortgages also edged lower to 6.00%, while jumbo 30-year mortgage rates held steady at 6.52%. By contrast, rates on FHA-backed loans and 5/1 adjustable-rate mortgages increased slightly during the week.
Refinancing accounted for 41.4% of all mortgage applications, virtually unchanged from the previous week’s 41.5% share.
Demand for adjustable-rate mortgages continued to soften, with ARMs representing 7.6% of total applications, down from the prior week and marking the lowest share since January. The decline reflects a flatter Treasury yield curve that has kept short-term interest rates relatively elevated, reducing the cost advantage traditionally offered by adjustable-rate products.
Government-backed lending also shifted modestly during the week. FHA-backed applications declined to 16.9% of total mortgage activity from 17.9%, while loans guaranteed by the Department of Veterans Affairs increased to 12.9% from 12.3%. Applications through the U.S. Department of Agriculture accounted for 0.4% of total volume, down slightly from the previous week.
Although mortgage rates remain well above the historic lows seen earlier this decade, steady purchase demand suggests that improving inventory conditions and moderating home-price growth are helping offset affordability challenges. The latest application data indicate that buyers remain active as the housing market enters the second half of the year, even as refinancing activity continues to depend on incremental movements in borrowing costs.
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