Homebuyers finally responded, after mortgage rates hit lowest level in three months

Steve Pfost | Newsday | Getty ImagesA brief drop in interest rates caused a strong bump in otherwise tepid mortgage demand

Total mortgage application volume jumped 9. 4% last week compared with the previous week, according to the Mortgage Bankers Association's seasonally adjusted index

Last week's results included an adjustment for the July 4 holiday

That was the lowest level in three months

Refinance demand has been particularly weak because mortgage rates were stuck at high levels for so long

Applications for a mortgage to purchase a also rose 9% for the week and were 25% higher than the same week one year ago. "buyer demand is being fueled by increasing housing inventory and moderating -price growth," said Joel Kan, MBA's Vice President and Deputy Chief Economist. "The average loan size on a purchase application, at $432,600, was at its lowest since January 2025. "While purchase mortgage demand has historically tr historically pretty closely with actual sales, there are a lot of unusual factors in today's market

Consumer sentiment is unsteady, and cancellation rates on contracts has been high for both new and existing s

So far, pending sales, which represent signed contracts, have not been rising along with mortgage demand

Mortgage rates began rising again just before the July 4 holiday, and are up again this week so far, according to a separate survey from Mortgage News Daily

It may not, however, be a sign of a stronger move higher. "We often tend to see slightly brisk movement in the opposite direction after experiencing a consistent trend in the other direction

The month of June was arguably such a trend, and it took rates to their lowest levels in several months," wrote Matthew Graham, chief operating officer of Mortgage News Daily. "Apart from the last few days of June, today's rates are still the lowest since late April.