Mortgage Rates: Highest Since January 2023
- Despite mortgage rates climbing for the third consecutive week to levels not seen as January, some homebuyers remain resilient.
- The average contract interest rate for a 30-year fixed-rate mortgage with conforming loan balances (loans of $806,500 or less) rose to 6.98%, up from 6.92%.
- Joel Kan, an MBA economist, noted that increased housing inventory in many markets is supporting transaction volume, offsetting economic uncertainty.
Homebuyers are facing the highest mortgage rates as January 2023, yet purchase applications are up. This article analyzes the latest data, revealing a 2% increase in purchase applications despite the rise in interest rates, now averaging 6.98% for a 30-year fixed-rate mortgage. Refinance applications have declined, but remain above last year’s numbers. Explore the factors influencing these trends, including housing inventory and economic indicators. Learn how consumer confidence and the labor market play a pivotal role in shaping the mortgage landscape. News Directory 3 provides the key insights into the evolving mortgage market. Discover what’s next …
Home Purchase Applications Rise Despite Interest Rate Increase
Updated May 28, 2025
Despite mortgage rates climbing for the third consecutive week to levels not seen as January, some homebuyers remain resilient. According to the Mortgage Bankers association (MBA), purchase applications increased 2% compared to the previous week. The purchase applications also show an 18% increase compared to the same week last year.
The average contract interest rate for a 30-year fixed-rate mortgage with conforming loan balances (loans of $806,500 or less) rose to 6.98%, up from 6.92%. Points decreased slightly to 0.67 from 0.69,wich includes the origination fee,for loans with a 20% down payment.
Joel Kan, an MBA economist, noted that increased housing inventory in many markets is supporting transaction volume, offsetting economic uncertainty. This increase in housing inventory is helping to drive the demand for home purchases, despite the higher interest rates.
However, rising rates impacted refinance applications, which fell 7% for the week. Even with the drop, refinance demand remains 37% higher than the same week last year. Conventional refinances decreased by 6%, while VA refinances saw a larger drop of 16%, according to Kan.
Mortgage rates saw a slight dip at the start of this holiday-shortened week following a report on consumer confidence. Matthew Graham, chief operating officer at Mortgage News Daily, pointed out that while the Consumer Confidence Index was stronger than expected, concerns about the labor market emerged. Graham noted that weaker labor conditions tend to push rates lower, leading to an improved bond market and revised rates from several mortgage lenders.
What’s next
the market will continue to watch economic indicators, especially those related to employment and consumer confidence, to gauge the future direction of mortgage rates and their impact on both purchase and refinance activity. The mortgage market remains sensitive to these shifts.