Oil-driven rate dip lifts purchase applications while ARM demand retreats to a six-month low
Mortgage application volume held essentially flat in the week ending June 26, inching up just 0.04% on a seasonally adjusted basis, according to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.
However, the details beneath that near-standstill offer a more nuanced picture for originators heading into the second half of the year.
Results were adjusted to account for the Juneteenth holiday.
A modest decline in oil prices eased mortgage rates slightly, nudging the 30-year fixed conforming rate down two basis points to 6.57%. That was enough to lift purchase applications 1% for the week on a seasonally adjusted basis, while refinance activity edged down 1%, leaving the refinance share of total applications at 41.4%.
"Mortgage rates eased slightly last week as oil prices declined," said Joel Kan, MBA's Vice President and Deputy Chief Economist.
"As a result, mortgage applications increased modestly, with an uptick in purchase activity offsetting a smaller decline in refinances."
Purchase activity holds its ground
For brokers tracking buyer momentum, the purchase data offered reasons for cautious optimism. Purchase applications were 3% higher than the same week in 2025, extending what Kan described as "almost three months" of consecutive year-over-year growth.
Prospective buyers, he noted, are finding opportunities in markets where inventory has improved and home-price growth has begun to cool.
That trend echoes patterns seen earlier in the spring, when a rate dip drew buyers back into the pipeline after weeks of hesitation. While the current gains are narrower, the consistency of year-over-year improvement signals that underlying demand has not evaporated — it is simply rate-sensitive and inventory-dependent.
ARM loans retreat as rate spread narrows
The week's most telling data point may be the sharp retreat in adjustable-rate mortgage demand. ARM loans fell to just 7.6% of total applications, their lowest share since January 2026 and down from a peak of 9.6% in mid-May. The explanation lies in the flattening yield curve.
As discussed in MBA's prior weekly data for the week ending June 19, the 5/1 ARM rate had already dropped to 5.68%. In the most recent survey, it climbed back to 5.79%, narrowing the gap with the 30-year fixed and reducing the financial incentive to take on rate reset risk.
That dynamic aligns with what loan officers observed when ARM share slid during the Memorial Day week, when borrowers consistently opted for fixed-rate certainty as geopolitical and economic uncertainty kept rate forecasts volatile.
Elsewhere in the rate data, the 15-year fixed rate dipped to 6.00% from 6.02%, while FHA 30-year rates ticked up to 6.27%. The FHA share of total applications fell to 16.9% from 17.9%, while the VA share rose to 12.9% from 12.3%.
Jumbo 30-year rates held steady at 6.52%, though points decreased, suggesting lenders may be adjusting pricing structures rather than rates to compete for higher-balance borrowers.
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