Mortgage refinance demand drops 18% as rates hit highest level since August
Mortgage refinance demand has significantly decreased, with applications dropping 18% as interest rates reach their highest level since August. Conventional, FHA, and VA loan applications all saw substantial declines, contributing to the lowest share of refinance applications since June 2025. Meanwhile, mortgage rates have slightly decreased due to a potential easing of geopolitical tensions, impacting bond yields.
- ▪Refinance applications fell 18%, with conventional refinances down 14%, FHA applications down 18%, and VA applications down 34%.
- ▪Refinance applications accounted for only 38% of total applications, the lowest share since June 2025.
- ▪Mortgage rates slightly decreased as investors reacted to a potential de-escalation in the war with Iran.
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"There were large declines in applications across loan types – conventional refinances were down 14 percent, along with an 18 percent decrease for FHA applications and a 34 percent decrease for VA applications. Overall, refinance applications accounted for 38 percent of applications, the lowest share since June 2025," said Joel Kan, MBA's vice president and deputy chief economist in a release.Applications for a mortgage to purchase a home fell 0.4% for the week and were just 5% higher than the same week one year ago. "The average loan size for a purchase application reached another survey high at $473,600, as borrowers with smaller loan sizes were less active given the higher rate environment and its negative impact on their purchasing power," Kan added.
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