Potential buyers arrive during an open house at a home in Seattle, Washington, USA, on Sunday, January 18, 2026.
David Ryder | Bloomberg | Getty Images
Mortgage rates fell sharply last week, and while that helped halt refinance gains, homebuyer demand appeared unfazed.
According to the Mortgage Bankers Association’s seasonally adjusted index, overall mortgage application volume remained essentially flat, increasing just 0.4% from 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 6.17% to 6.09%, with points for loans with a 20% down payment decreasing from 0.56 to 0.53, including the origination fee. That was the lowest level since September 2022.
Home loan refinancing applications rose 4% last week compared to the previous week, 150% higher than the same week a year ago when interest rates were 79 basis points higher. Refinancing has gone down a bit recently due to falling interest rates. Even though the comparisons to last year are quite large, it is important to keep in mind that refinancing was quite low at this time last year.
Mortgage applications to purchase a home fell 5% for the week and rose 12% year over year. While lower mortgage rates are improving affordability, home prices are still slightly higher than this time last year and economic uncertainty is weighing heavily on consumers.
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Redfin cited this uncertainty in a report showing that nearly 40,000 home sales contracts were canceled nationwide in January, representing 13.7% of homes that were under contract. That’s up from 13.1% a year ago and the highest January share since 2017 records.
Borrowers also sought more savings on adjustable-rate mortgages, which are slightly riskier but offer lower interest rates.
“ARM share remained above 8 percent as ARM interest rates remained more than 80 basis points below conforming fixed rates,” said Joel Kan, an MBA economist, in a press release. “This creates an incentive for cash-sensitive borrowers or those seeking larger loans to choose this product offering.”