In an aerial photo, two-story single-family homes line neighborhood streets on January 13, 2026 in Thousand Oaks, California.
Kevin Carter | Getty Images
Mortgage rates fell to their lowest level in a month, boosting refinancing activity and offsetting weak demand from homebuyers. According to the Mortgage Bankers Association’s seasonally adjusted index, total mortgage application volume increased 1.8% 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 6.51% to 6.42%, with points for loans with a 20% down payment increasing from 0.61 to 0.62, including the origination fee.
“Given the evolving situation in the Middle East and its impact on energy and commodity prices, mortgage rates fell last week,” said Joel Kan, an MBA economist, in a press release.
Home refinance applications, the most sensitive to weekly interest rate fluctuations, rose 5% this week and were 15% higher than the same week a year ago.
Due to ongoing economic uncertainty, homebuyers remain cautious. Home purchase applications fell 1% weekly and were 3% lower than the same week a year ago. This means that applications were below the previous year’s level for the second time in a row.
“Purchasing activity remained subdued as potential homebuyers remained cautious amid current economic uncertainty, which resulted in purchase applications remaining below year-ago levels for the second consecutive week,” Kan said.
Mortgage rates fell further this week, hitting a four-week low on Tuesday, as volatility in oil prices related to the Iran conflict caused fluctuations in bond yields.
“As far as drivers of market action, it’s the same old story since early March. The Iran war is the primary motivation and oil prices are often the best correlated indicator of bond yields and interest rates,” wrote Matthew Graham, chief operating officer at Mortgage News Daily.
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