Mortgage Applications Drop as Interest Rates Rise

Victor Becerra, a resident of Altadena, CA, recently found himself living next door to a property that has just been sold on Wapello St. The date was June 4, 2025.

Fear of Tariffs and Economic Concerns Drive Up Rates

Last week, worries over tariffs and the broader economy led to a surge in Treasury yields. Consequently, mortgage rates also saw a hike. Data from the Mortgage Bankers Association’s seasonally adjusted index reported a 10% drop in total mortgage application volume compared to the previous week.

It was noted that the average interest rate for 30-year fixed-rate mortgages with conforming loan balances of $806,500 or less rose to 6.82% from 6.77%. Despite this, points stayed steady at 0.62, including the origination fee, for loans with a 20% down payment.

Joel Kan’s Take on The Situation

Joel Kan, the vice president and deputy chief economist at the MBA, expressed that the rise in Treasury yields last week was primarily due to renewed concerns about the impact of tariffs on the economy. This, in turn, caused mortgage rates to rise after a two-week decline, resulting in slower application activity.

Slowing Pace in Mortgage Applications for Home Purchases

Applications for mortgages to buy homes saw a 12% decrease for the week. However, they were still 13% higher than the same week last year. This was the slowest pace since May. The housing market experienced an increase in inventory since the beginning of the year, but potential sellers are beginning to withdraw as buyer demand decreases and home prices soften.

Jumbo Rates Lower Than Conventional Rates

Jumbo rates were lower than conventional rates for the third consecutive week. Kan suggests that this might be because some depositories are preparing for growth in balance sheet lending.

Refinance Applications Also Dip

Applications to refinance a home loan fell by 7% for the week. However, they were still 25% higher than the same week in the previous year. Kan noted that the dip in refinance applications was due to higher rates. He pointed out that VA refinances led the decrease, with a significant 22% drop, partially reversing their gain from the previous week.

Continued Rise of Mortgage Rates

Mortgage rates have continued to rise at the beginning of this week, despite an unexpectedly high read on inflation. Matthew Graham, chief operating officer at Mortgage News Daily, emphasized that the impact of tariffs is visible, even though it was smaller than what many forecasters had predicted.

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