Rising borrowing costs push total mortgage applications down, with refi demand taking the sharpest hit
Mortgage application volume dropped in the week ending May 22, 2026, as the 30-year fixed rate climbed to its highest point since August 2025, cooling refinance demand and nudging purchase activity lower across all loan types, according to the Mortgage Bankers Association (MBA).
Total applications fell 8.5% on a seasonally adjusted basis from the prior week, with the refinance index down 18%.
The refinance share of all activity fell to 37.5% — its lowest reading since June 2025 — from 41.9% the week before.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($832,750 or less) rose to 6.65% from 6.56%, representing a 30-basis-point climb over five consecutive weeks.
Jumbo rates moved in tandem, reaching 6.68%, while FHA 30-year rates increased to 6.31% and the 15-year fixed ticked up to 5.97%.
"The 30-year fixed rate has increased 30 basis points over the past five weeks to its highest level since August 2025," said Joel Kan, MBA's vice president and deputy chief economist.
"With the rate now at 6.65%, many borrowers understandably backed away from refinancing last week."
The declines cut across loan types. Conventional refinances were down 14%, FHA applications fell 18%, and VA applications dropped a steeper 34%.
The adjustable-rate mortgage share dipped to 9.4% of total applications.
Matt Schulz of LendingTree says more than half of borrowers who bought homes between 2023 and 2025 could benefit from refinancing if rates return to 6%, with meaningful monthly savings possible even in today’s market.https://t.co/aggN4cVZ61
— Mortgage Professional America Magazine (@MPAMagazineUS) May 26, 2026
Purchase demand holds steady despite rate pressure
Purchase applications declined just 0.4% on a seasonally adjusted basis, and were still 5% above the same week one year ago. It's a sign that buyers, while cautious, haven't entirely retreated.
The average loan size for a purchase application reached a new survey high of $473,600.
"Borrowers with smaller loan sizes were less active given the higher rate environment and its negative impact on their purchasing power," Kan said.
That figure underscores a widening bifurcation in the market, with higher-income buyers continuing to transact while entry-level and mid-range borrowers pull back.
Rate environment unlikely to ease quickly
The MBA projects 30-year mortgage rates to stay between 6.1% and 6.3% in 2026, with economists noting rates have moved more than 30 basis points higher over several recent weeks as longer-term yields have priced in inflationary pressures.
MBA chief economist Mike Fratantoni has forecast that mortgage rates and inflation are likely to remain elevated through 2026, with the Fed expected to hold rates at their current range as geopolitical tensions keep cut expectations on ice.
Purchase demand is resilient, but the refinance window that opened earlier this year has narrowed considerably.
Originators who built pipelines around rate-and-term refis will need to pivot toward purchase transactions and creative product strategies to maintain volume through the summer months.
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