Mortgage applications fall to lowest since May

The volume of mortgage applications in the United States fell by 3.8% during the fourth week of July 2025, reversing the previous week's modest 0.8% increase, according to data from the Mortgage Bankers Association (MBA).

This decline dragged total mortgage activity to its lowest level since May, despite a modest easing in mortgage rates over the month. The drop underscores the persistent caution among prospective buyers and homeowners amid a climate of economic and labor market uncertainty, which continues to dampen enthusiasm for large-scale financial commitments like home purchases or refinancing.

Breaking down the data, applications for refinancing—a segment highly sensitive to short-term interest rate movements—slipped 1%, reflecting the limited incentive for homeowners to refinance given current rate levels.

Meanwhile, purchase applications fell more sharply, down 6% week-over-week, suggesting deeper hesitancy among potential homebuyers. These figures highlight growing affordability concerns, especially as many households grapple with elevated home prices, tighter lending standards, and broader financial insecurity.

On the rate front, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) edged down by a marginal 1 basis point to 6.83% in the week ending July 25th, from 6.84% the week prior.

This slight retreat came after four consecutive weeks of climbing rates, which had briefly peaked at the highest level in a month. Despite the weekly dip, the rate remains just above the 6.82% registered one year ago, offering little reprieve for rate-sensitive borrowers.

“Mortgage applications fell to their lowest level since May, with both purchase and refinance activity declining over the week,” noted Joel Kan, MBA’s vice president and deputy chief economist. “There is still plenty of uncertainty surrounding the economy and job market, which is weighing on prospective homebuyers’ decisions.”

The latest figures suggest that the housing market remains stuck in a low-activity environment, with demand held back by a combination of elevated borrowing costs, limited housing supply, and macroeconomic uncertainty. Even with some softening in mortgage rates since the start of July, sentiment has yet to recover meaningfully, particularly among first-time buyers who face tighter credit conditions and high entry barriers.

Unless there is a sustained drop in interest rates or a clear improvement in labor market confidence, housing activity is likely to remain subdued heading into the latter half of the year.