Mortgage rates hit the highest level in a month, causing lower income homebuyers to drop out

Mortgage rates continued to climb higher last week, causing both current homeowners and potential home buyers to retreat from the market, especially first-time buyers. Total mortgage application volume fell 4.4% compared with the week before, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $832,750 or less, increased to 6.45% from 6.37%, with points increasing to 0.66 from 0.61, including the origination fee, for loans with a 20% down payment.

“The ongoing conflict in the Middle East continues to push rates higher. Mortgage rates last week increased to their highest level in a month,” said Joel Kan, MBA’s vice president and deputy chief economist in a release.

Applications for a mortgage to purchase a home dropped 4% for the week and were just 5% higher than the same week one year ago. The spring housing market has been a bumpy one, starting out very slowly when rates rose sharply in March. It seemed to be picking up recently, as rates fell back and more supply came on the market, but buyers again are struggling with affordability.

“The average loan size on a purchase application increased to $467,300, the highest in the survey’s history dating back to 1990. This increase could indicate that potential first-time buyers, and buyers looking for homes at lower price points, might be the most hesitant to move forward given the economic uncertainty and higher rates,” said Kan.

Applications to refinance a home loan fell the hardest, down 5% for the week. Demand was still 29% higher than the same week one year ago, but that annual comparison has been shrinking. The 30-year fixed rate was just 39 basis points higher at this time last year. The refinance share of mortgage activity decreased to 42% of total applications, the lowest since August 2025.

Mortgage rates moved even higher to start this week, according to a separate survey from Mortgage News Daily. The next big move could come Friday, following the release of the government’s monthly employment report.