Mortgage demand dropped for the first time this year as economic uncertainty fuelled by the Iran war keeps rates high, leaving homebuyers hesitant.
According to the Mortgage Bankers Association, total mortgage applications were down 0.8% week-over-week, despite rates falling slightly.
The average 30-year-fixed-rate decreased from 6.57% to 6.51% for loans with a 20% down payment.
Despite this fall, MBA economist Joel Kan said the higher rates and economic uncertainty continued to weigh on mortgage applications last week.
“Many potential refinance borrowers have been frozen out by the sharp increase over the past month,” he said.
“The pace of refinance applications was at its lowest level since December 2025.”
While applications to purchase a home rose 1% from the week before, they were 7% lower than the same week a year ago.
This marks the first year-over-year decline since January 2025.
“However, certain loan types and geographic segments are faring better than others because of lower rates on ARM and FHA loans as well as growing housing inventory in some local markets,” Kan said.
“Applications for FHA purchase applications were up 5% over the week, supported by the FHA mortgage rate being about 30 basis points lower than the conventional mortgage rate.”
Overall activity attributed to refinances fell to 44.3%, down from 45.3% last week.
Applications to refinance a home fell 3% for the week and 4% year-over-year.
Mortgage rates have been essentially flat to start this week, but are likely to move lower on Wednesday, after President Donald Trump announced a two-week ceasefire Tuesday night.
The yield on the U.S. 10-year Treasury, which mortgage rates loosely follow, fell sharply on the news.
