US Mortgage Market Grinds to Halt—Hits Lowest Level Since May as Rates Refuse to Budge

The US mortgage market just slammed into a wall—activity cratered to its weakest point since May as interest rates dig in like a tick.

No relief in sight: Borrowers face a frozen landscape while lenders twiddle their thumbs waiting for the Fed to blink.

Meanwhile, Wall Street still somehow profits from the stagnation—because of course they do.

Purchase and mortgage refinance applications slide despite steady rates

Joel Kan, the Mortgage Bankers Association’s deputy chief economist and vice president, said, “Mortgage applications fell to their lowest level since May, with both purchase and refinance activity declining over the week. There is still plenty of uncertainty surrounding the economy and job market, which is weighing on prospective homebuyers’ decisions.”

Applications to buy a home dropped 6% compared to the previous week. They were 17% higher than the same time last year, but Kan pointed out that volume remains low enough to distort the year-over-year comparison.

He added, “Applications for conventional, FHA, and VA purchase loans fell, despite slowing home-price growth and increasing levels of for-sale inventory in many regions.” That means buyers aren’t stepping back because homes are too expensive — they’re stepping back because the outlook is too murky.

Refinancing isn’t doing much better. Refinance applications dropped 1% on the week. Compared to the same week in 2024, refis were up 30%, but activity is still NEAR historic lows.

This is the third week in a row of declining refinance volume. Mortgage rates were basically the same a year ago, only one basis point lower, so there’s no real incentive driving a wave of refis right now.

Rates did dip slightly at the start of this week, but bigger moves could be coming. The next big update comes Wednesday, when the Federal Reserve announces its latest decision on interest rates.

Fed Chair Jerome Powell’s comments will be closely watched. Then, on Friday, the monthly employment report from the government is expected. That data could shape how the mortgage market moves next. Until then, borrowers are waiting, and the numbers show it.

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