The recent dip in mortgage rates did not spark a surge in homebuying activity, with purchase loan applications contracting by 4% compared to the week before, according to the Mortgage Bankers Association (MBA). Despite this, demand remains strong year-over-year, up 18%.
Refinance activity also decreased, with requests down 4% during the week ending May 30 and up 42% from last year. The average refinance loan size was at its smallest since July 2024.
Redfin reported a high rate of cancelled purchase contracts in April, with 14% of homes that went under contract not selling due to cancellation. This is the second-highest share in records dating back to 2017, after April 2020.
Economic uncertainty and rising mortgage rates are contributing to this trend. Mortgage rates have rebounded above 6.8% since hitting a low of 6.48% on April 4. The Federal Reserve has been cautious about cutting interest rates due to the ongoing impact of Trump-era policies.
In April, purchase loan demand peaked, with the MBA’s seasonally adjusted purchase index reaching its lowest reading since April 25. While demand remains strong year-over-year, it has declined compared to previous weeks and months.
Source: https://www.inman.com/2025/06/04/dip-in-mortgage-rates-doesnt-do-much-to-excite-homebuyers