The Federal Reserve held benchmark rates steady in the range of 4.25% to 4.5% following its two-day meeting last week, as officials decide when it will be appropriate to cut rates. Chair Jerome Powell said on Tuesday that the central bank will continue its “wait-and-see” stance.
Mortgage rates edged slightly higher but remained within the same narrow range, Kan added. MBA data shows the average rate for 30-year fixed-rate conforming mortgage contracts (loan balances of $806,500 or less) was 6.88%, up from 6.84% the previous week. Jumbo loans (greater than $806,500) also averaged 6.88%, an increase from 6.81% the week before.
The refinance index increased by 3% from the previous week and was 29% higher than the same week one year ago. Meanwhile, the seasonally adjusted purchase index declined by 0.4% from the prior week. The unadjusted purchase index dropped 11% week over week but was still 12% higher than the same week last year.
The refinance share of mortgage activity rose to 38.4% of total applications, up from 37.3% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 6.9%. ARMs typically gain market share when rates are elevated, as borrowers can access lower initial rates compared to traditional fixed-rate mortgages
Analysts at BTIG — who noted this has been one of the most stable quarters for mortgage rates in recent memory, despite Treasury volatility around Liberation Day in April — expect that “affordability products like ARMs are more likely to stage a comeback if the Fed delivers rate cuts in the back half of the year,” according to a report released on Wednesday.
However, the analysts are “doubtful the interest-only jumbo product (which proliferated during the pandemic as an affordability product when rates were near zero) will resurface while the macro outlook and home price stability remain highly sensitive.”
By product, the Federal Housing Administration (FHA) share of total applications continued to tick up, increasing from 17.8% to 19.3% during the week. The U.S. Department of Veterans Affairs (VA) share of applications decreased to 11.7% from 12.1%, while the U.S. Department of Agriculture (USDA) share fell slightly to 0.5% from 0.6%.
“Applications increased slightly overall driven by FHA refinances, but conventional applications saw declines over the week. The average loan size for purchase applications declined to $436,300, the lowest level since January 2025, driven by decreasing conventional purchase loan sizes,” Kan said.
