Mortgage applicants still won't cross the 7% barrier

Home shoppers aren't caving in to higher-for-longer mortgage rates. 

The average contract interest rate for a 30-year, fixed-rate conforming mortgage was stuck at 7.02% for two weeks in a row, according to the Mortgage Bankers Association. The trade group reported application volume down 2% for the week ending Jan. 24, compared to the seven days prior. 

The Weekly Mortgage Applications Survey included an adjustment for Martin Luther King Jr. Day. On a seasonally adjusted basis, both the MBA's refinance and purchase indexes fell 7% and 0.4% week-over-week. On an unadjusted basis, purchase volume was down 7% compared to last January.

"Application activity was slightly weaker, primarily because of a 7% decline in refinancing across both conventional and government loans," said Joel Kan, MBA vice president and deputy chief economist, in a press release. 

Refinances last week made up a little over a third of applications, falling to 37.1% of total activity. The Refinance Index however was up 5% against the same time a year ago, when rates across the board were a tick lower. Application volume rose to start 2024 until rates flatlined in the high 6% range to halt that momentum by the end of January.

High rates have kept some home price increases at bay but have also dimmed the outlook for the rest of 2025. Fannie Mae downgraded its origination forecast last week, suggesting a further lock-in effect and affordability constraints. 

Jumbo home loan applicants last week were paying the same effective rate as conforming mortgage borrowers, at 7.02%. 

Consumers seeking Federal Housing Administration-backed loans saw the slightest relief, with the effective rate for those loans dropping 2 basis points to 6.72%. Borrowers securing 15-year FRMs also got slightly lower rates at 6.37%, eight basis points lower than the prior week. 

Interest in adjustable-rate mortgages ticked up, with the products accounting for 5.8% of loan volume last week. Those borrowers however encountered slightly higher interest rates at 6.44%.