US mortgage rates lowest in three months

Mortgage application volume in the United States rose by 2.7% in the final week of June 2025, building on the 1.1% gain recorded the previous week, according to seasonally adjusted data from the Mortgage Bankers Association (MBA).

The increase reflects continued strength in consumer interest, driven largely by a notable drop in borrowing costs.

Supporting this momentum, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) fell by 9 basis points to 6.79%, marking the lowest level in nearly three months. This compares favorably to a 7.03% average rate recorded during the same period last year.

The decline in mortgage rates mirrors the drop in longer-dated Treasury yields, as investors grow less concerned about persistent inflation and tariff-related disruptions. Market sentiment has shifted in recent weeks, with expectations now leaning toward at least two quarter-point interest rate cuts by the Federal Reserve before year-end.

Within the overall mortgage activity, refinancing applications—typically more sensitive to short-term interest rate changes—jumped by 7% on the week. This reflects a resurgence in homeowners seeking to lock in lower rates amid growing anticipation of looser monetary policy. On the other hand, applications for mortgages to purchase new homes remained relatively flat, underscoring persistent affordability challenges, supply constraints, and lingering caution among first-time homebuyers.

Overall, the sustained decline in mortgage rates is offering welcome relief to borrowers and could support modest housing market activity in the coming months. However, broader housing market dynamics—such as home price trends, wage growth, and regional inventory levels—will remain critical in determining the strength and durability of this recovery.