A short drop in interest rates sparked a big rise in mortgage demand that had been slow before. The number of mortgage applications rose 9.4% last week compared to the week before, according to the seasonally adjusted measure from the Mortgage Bankers Association. The scores from last week were changed to account for the July 4th holiday.
For 30-year fixed-rate mortgages with conforming loan amounts of $806,500 or less, the average interest rate dropped from 6.79% to 6.77%. Points stayed the same at 0.62, which includes the origination fee, for loans with a 20% down payment. It had been three months since it was that low.

The number of requests to refinance a home loan went up by 9% last week and by 56% from the same week last year. Because mortgage rates have been high for so long, there hasn't been much desire to refinance.

Also, the number of people applying for mortgages to buy homes went up by 9% last week and by 25% from the same week last year.

Joel Kan, vice president and assistant chief economist at the MBA, said, "Homebuyer demand is being fueled by rising home prices and rising housing inventory." "At $432,600, the average loan size for a purchase became the smallest it had been since January 2025."

In the past, demand for purchase mortgages has been pretty closely linked to real home sales. However, there are a lot of unusual factors in the market right now. People's moods aren't stable, and a lot of arrangements for both new and used homes have been canceled. So far, pending sales, which are contracts that have been signed, have not been going up at the same rate as credit demand.

A different poll from Mortgage News Daily shows that mortgage rates started going up again right before the Fourth of July holiday and have been going up again this week so far. But it might not mean that prices are going to go up more quickly.

"After a steady trend in the opposite direction, we often see a little faster movement in the opposite direction." It's possible that June was a trend like this, and rates dropped to their lowest level in a few months, wrote Matthew Graham, CEO of Mortgage News Daily. "Rates are still the lowest they've been since late April, except for the last few days of June."

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