Mortgage rates finally fell a bit last week, but not enough to help the struggling mortgage market. Economic uncertainty fueled by the Iran war is keeping interest rates high and homebuyers on edge. According to the Mortgage Bankers Association’s seasonally adjusted index, total mortgage application volume fell 0.8% last week compared to the previous week.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $832,750 or less decreased from 6.57% to 6.51%, with points for loans with a 20% down payment decreasing from 0.65 to 0.61, including the origination fee.
Mortgage applications to buy a home rose 1% this week, but were 7% lower than the same week a year ago. That was the first year-over-year decline since January 2025.
“However, certain loan types and geographic segments are performing better than others due to lower interest rates on ARM and FHA loans as well as growing housing inventory in some local markets,” said Joel Kan, an MBA economist, in a press release. “FHA purchase applications increased 5 percent for the week, supported by the FHA mortgage rate, which was approximately 30 basis points lower than the conventional mortgage rate.”
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The number of home loan refinancing applications fell 3% for the week and was 4% lower than the same week a year ago. This was also the first year-over-year decline in refinances since January 2025.
“Many potential refinance borrowers were frozen out by last month’s sharp increase. The pace of refinance applications was at its lowest level since December 2025,” Kan said.
Mortgage rates were essentially flat earlier this week but are expected to fall on Wednesday after President Donald Trump announced a two-week truce on Tuesday evening. The 10-year Treasury yield, which loosely tracks mortgage rates, fell sharply on the news.
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