Purchase demand softened while refinance activity continued to show resilience despite higher borrowing costs, according to the Mortgage Bankers Association's latest weekly survey.
Mortgage application volume declined 2.7% on a seasonally adjusted basis for the week ending July 10, as mortgage rates climbed to their highest level in nearly a year, according to the Mortgage Bankers Association's Weekly Applications Survey released Wednesday.
The average rate for a 30-year fixed-rate conforming mortgage increased to 6.65%, up from 6.58% the prior week. That marks the highest level since August 2025 and coincided with a pullback in purchase demand.
The MBA's seasonally adjusted Purchase Index fell 7% from the previous week and slipped 2% below the same week a year ago. On an unadjusted basis, purchase applications were up 3% from the prior week, reflecting lingering holiday-related distortions following the July Fourth weekend.
Meanwhile, refinance activity moved in the opposite direction.
The Refinance Index rose 4% from the previous week and was 7% higher than a year earlier. Refinancing accounted for 43.2% of all mortgage applications, up from 40.6% the week before.
"Mortgage applications declined as the 30-year fixed rate increased to 6.65%, the highest level since August 2025," said Joel Kan, MBA's vice president and deputy chief economist. "Purchase applications were down over the week and dipped below last year's pace in the week following the July 4th holiday."
Kan noted that refinance borrowers remained active despite the rate increase.
"Despite higher mortgage rates, refinance applications increased, led by FHA and VA refinance applications rising 9 and 10 percent, respectively," he said.
Government Lending Gains Share
Government-backed lending continued to make up a larger portion of overall application activity.
The FHA share of total applications increased to 17.7%, up from 16.4% the prior week, while the VA share rose to 13.6% from 13.0%. USDA loans held steady at 0.5%.
Adjustable-rate mortgages became slightly less popular as the ARM share of applications declined to 7.1% of total volume.
Rates move higher across most products
Borrowing costs increased across nearly every major mortgage product:
- 30-year conforming fixed: 6.65%, up from 6.58%
- 30-year jumbo fixed: 6.62%, up from 6.50%
- 30-year FHA: 6.33%, up from 6.28%
- 15-year fixed: 6.05%, up from 5.99%
The lone exception was the 5/1 adjustable-rate mortgage, where the average rate declined to 5.75% from 5.84%.
Bottom Line
This week's data reinforces that purchase demand remains highly rate-sensitive, with applications pulling back as soon as mortgage rates approached 6.65%. For purchase-focused lenders, that means competition for borrowers is likely to remain intense through the summer.
At the same time, refinance opportunities have not disappeared. FHA and VA borrowers continued to refinance even as rates rose, suggesting there are still pockets of the servicing portfolio where savings, cash-out needs, or product changes are driving activity. Lenders with strong government lending capabilities may continue to find opportunities even in a higher-rate environment.
The broader takeaway is that the market remains bifurcated: purchase volume is struggling to gain momentum, while refinance activity is gradually improving from historically low levels, even without a meaningful decline in mortgage rates.
