Mortgage rates have dropped to their lowest level since April, prompting an increase in refinancing applications. According to the Mortgage Bankers Association’s seasonally adjusted index, demand for refinancing rose 7% last week compared to the previous week, with applications 40% higher than the same week one year ago.
The average contract interest rate for 30-year fixed-rate mortgages decreased to 6.79%, a 24-basis-point drop from last week’s rate. This decline has led current homeowners to seek savings by refinancing their homes.
Refinance applications were driven by a 10% increase in conventional refinance applications and a 22% increase in VA refinance applications, according to Joel Kan, vice president and deputy chief economist at the MBA. The average loan size for refinancing increased to $313,700, up from less than $300,000 over the past six weeks.
In contrast, homebuyers were less affected by the drop in rates, with mortgage purchase applications increasing only 0.1% for the week and 16% higher than last year’s same week.
Despite the decline in mortgage rates, overall uncertainty continues to hold homebuyers out of the market. Purchase activity remained flat over the week, according to Kan.
Mortgage rates are expected to be volatile, with job openings data showing an increase. According to a separate survey from Mortgage News Daily, rates typically move higher if job openings are higher than expected. However, experts caution that this volatility is short-lived compared to what could be seen after the government’s release of the monthly employment report on Thursday.
Source: https://www.cnbc.com/2025/07/02