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Mortgage Rates Hover Near 7% as Homebuyer Demand Remains Tepid

Mortgage rates for 30-year fixed loans slightly increased to 6.88% despite lower Treasury yields, keeping the market in a narrow range near 7%. Homebuyer mortgage applications dipped slightly but remain 11% above last year, though overall demand is low due to high prices and limited inventory. Refinance applications rose 3% last week and were 29% higher than last year, though volumes remain historically low.

Mortgage Rates Hover Near 7% as Homebuyer Demand Remains Tepid

Mortgage Rates Edge Up Amid Steady Demand

Mortgage rates and homebuyer interest showed little movement last week, reflecting a market trapped in a holding pattern. Despite global tensions and domestic economic uncertainty, mortgage rates held steady just below the 7% mark.

Subtle Rate Increase Despite Lower Treasury Yields

Last week, the average interest rate for a 30-year fixed mortgage on loans up to $806,500 ticked upward slightly, rising from 6.84% to 6.88%. At the same time, average points, including origination fees for loans with 20% down payments, dipped marginally from 0.66 to 0.63. These figures come from the Mortgage Bankers Association (MBA).

Joel Kan, MBA's vice president and deputy chief economist, noted that although Treasury yields fell on average amid recent geopolitical tensions and economic factors, mortgage rates still inched upward, remaining within a narrow range.

Demand for Home Purchase Mortgages Holds at Low Levels

Applications from prospective homebuyers decreased slightly by 0.4% compared with the week prior, accounting for seasonal adjustments including the Juneteenth holiday. While purchase demand is up by 11% compared to last year’s same week, it remains historically subdued due to inflated home prices and scarce inventory.

The average loan size for home purchases also shrank to $436,300, marking its lowest level since January 2025. Kan attributes this dip largely to smaller conventional loan amounts.

Refinance Activity Shows Gains but From a Low Base

Refinance applications rebounded by 3% week-over-week and were 29% higher than the same week last year. However, these gains came from a historically low volume, meaning percentage increases can appear exaggerated. The average 30-year fixed refinance rate last year at this time was just five basis points higher than today’s figure.

What Lies Ahead for Borrowers?

Since early April, mortgage rates have fluctuated within a tight 25-basis-point window just below 7%. This stability offers little incentive for buyers given the persistent challenges of high home prices and limited housing supply. Refinancing remains moderately attractive but subdued overall.

As economic and geopolitical uncertainties continue to evolve, prospective buyers and homeowners will likely remain cautious. Those watching the market can expect mortgage conditions to stay relatively steady unless significant shifts occur in the broader economy or Treasury yields.

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