Mortgage demand is mixed, as interest rates hit highest level since May

Mortgage demand started this year stronger than it did last year, even though interest rates are higher. Total mortgage application volume last week was 7% higher than the same week one year ago, 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 ($766,550 or less) increased to 7.09% from 6.99%, with points decreasing to 0.65 from 0.68 (including the origination fee) for loans with a 20% down payment. That rate was 34 basis points lower one year ago.

“Bond yields in the U.S. and abroad continued to move higher in response to concerns over a sticky inflation outlook and still too-high budget deficits, which pushed mortgage rates higher for the fifth consecutive week. The 30-year fixed rate is now at 7.09% — its highest level since May 2024,” said Joel Kan, MBA’s vice president and deputy chief economist.