Mortgage rates rise to highest level in nearly a year
For sale signs hang in front of condominiums for sale in Los Angeles, California, on July 9, 2026.
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Mortgage interest rates rose to their highest level since August 2025 last week, causing home buyers’ loan demand to retreat. However, demand for refinancing has increased.
Total mortgage application volume fell 2.7% last week compared to the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with loan balances of $832,750 or less increased to 6.65% from 6.58% last week; Points including the origination fee for loans with 20% down payment increased from 0.64 to 0.67.
Mortgage applications to buy a home fell 7% from the previous week and were 2% lower than the same week a year ago. Buyers are still struggling with high home prices as well as a low supply of affordable homes for sale.
Applications to refinance a mortgage rose 4% this week and were 7% higher than the same week a year ago. Last year, rates were just 17 basis points higher, so there isn’t much incentive for most borrowers to refinance. The reason percentage gains are likely is that there is a very small pool to begin with and some borrowers will cash out and refinance to take advantage of large gains in home equity.
“Despite higher mortgage rates, refinancing applications have increased, with FHA and VA refinancing applications increasing by 9 and 10 percent, respectively,” Joel Kan, MBA vice president and deputy chief economist, said in a statement.
The refinancing share of mortgage activity increased to 43.2% of total applications, from 40.6% in the previous week.
Mortgage rates are on the rise starting this week, according to a separate survey from Mortgage News Daily.
“The most significant contributor to the recent rise is the increase in fuel prices in July, combined with the fact that rates have never fallen below 6.52% in the last 2 months,” wrote Matthew Graham, chief operating officer of Mortgage News Daily. “In other words, we were already in a high range, and the increase in fuel prices simply increased rates.”
Rates recovered slightly on Tuesday after inflation came in much lower than expected.
