Rising Mortgage Rates Drive Down Home Loan Application Demand

Mortgage applications suffered another setback last week as rising interest rates dragged down demand for home loans, according to the Mortgage Bankers Association.

For the week ending July 10, MBA's Market Composite Index—a measure of total mortgage loan application volume—shed 2.7% on a seasonally adjusted basis from one week earlier.

"Mortgage applications declined as the 30-year fixed rate increased to 6.65 percent, the highest level since August 2025. Purchase applications were down over the week and dipped below last year’s pace in the week following the July 4th holiday," says MBA's Vice President and Deputy Chief Economist Joel Kan.

The seasonally adjusted Purchase Index, a leading indicator for home sales, plunged 7% from a week earlier, even as the index tracking refinance activity increased 4% week over week.

"Despite higher mortgage rates, refinance applications increased, led by FHA and VA refinance applications rising 9 and 10 percent, respectively," says Kan.  

According to MBA calculations, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ticked up from 6.58% to 6.65%.

However, Freddie Mac put average 30-year rates at 6.49% for the week ending July 9, up from 6.43% the previous week. It followed the unraveling of the ceasefire in the Middle East and the resumption of hostilities between the U.S. and Iran, which drove up oil prices.

While borrowing costs have remained elevated since the outbreak of the conflict this spring, the recently released Realtor.com® midyear forecast update projects rates will ease to around 6.3% by the end of 2026.

The Federal Housing Administration share of total applications increased to 17.7% from 16.4% the prior week. The Veterans Affairs share of total loan applications edged up from 13% to 13.6% from the prior week. The USDA share of total applications remained unchanged at 0.5%.

Mortgage rates calculated

Mortgage rates are calculated based on various factors in the economy, and the length of your loan will also figure into the mortgage rate you qualify for.

The 30-year mortgage rate is tied to the yield of the 10-year Treasury note, according to Fannie Mae. As the yield on the 10-year Treasury note moves, mortgage rates follow.

The yield on the 10-year Treasury note is determined by expectations for shorter-term interest rates in the economy over the duration of a bond, plus a term premium.