What's behind the recent decrease in applications?
Mortgage applications saw a decline last week, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending May 30, 2025. The Market Composite Index, a key indicator of loan application volume, decreased 3.9% on a seasonally adjusted basis, with an unadjusted drop of 15% from the previous week. This week’s figures account for the Memorial Day holiday.
The Refinance Index fell by 4% from the prior week, although it remains 42% higher than the same period last year. Similarly, the seasonally adjusted Purchase Index decreased 4%, and the unadjusted Purchase Index dropped 15% week-over-week, yet it stands 18% higher than a year ago.
“Most mortgage rates moved lower last week, with the 30-year fixed rate declining to 6.92% and staying in the 6.8 to 7% range since April,” said Joel Kan, MBA’s vice president and deputy chief economist. “Mortgage applications decreased over the week, but continue to exhibit annual gains, with purchase applications running 18% ahead of last year’s pace.”
Refinance and purchase trends
Kan also noted that “government purchase applications were little changed over the week driven by a slight increase in FHA purchase applications. Refinance activity fell across both conventional and government segment and the overall average refinance loan size was the smallest since July 2024, as potential borrowers hold out for larger rate drops.”
The refinance share of mortgage activity edged up to 35.2% of total applications, from 34.6% the week prior. The adjustable-rate mortgage (ARM) share of activity saw a decrease to 7.1% of total applications.
Among government-backed loans, the FHA share of total applications rose to 18.7% from 17.9% the week before. The VA share of total applications increased to 12.6% from 12.3%, while the USDA share remained constant at 0.5%.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 6.92% from 6.98%, with points also falling. For jumbo loan balances, the 30-year fixed-rate mortgage rate also decreased to 6.92% from 6.93%. Conversely, the average contract interest rate for 30-year fixed-rate mortgages backed by the FHA saw a slight increase to 6.68% from 6.66%. The rate for 15-year fixed-rate mortgages also increased to 6.25% from 6.23%, while the 5/1 ARM rate decreased to 6.14% from 6.22%.
The survey collects data on US residential mortgage applications. These applications, which are closed-end, originate through both retail and direct-to-consumer channels. The survey participants include a range of financial institutions, such as mortgage bankers, commercial banks, thrifts, and credit unions. All indexes used in the survey are benchmarked to a base period of March 16, 1990, set at a value of 100.
What are your thoughts on how these trends might impact the housing market in the coming months? Share your insights below.
