Rising mortgage rates cause surge in demand for riskier loans
Mortgage rates have risen, leading to a decrease in loan demand among homeowners and potential buyers. This increase has pushed consumers towards riskier loans, such as adjustable-rate mortgages. The Mortgage Bankers Association reported a 2.3% drop in total mortgage application volume last week.
- ▪Mortgage application volume dropped 2.3% from the previous week.
- ▪The average contract interest rate for 30-year fixed-rate mortgages increased to 6.56%.
- ▪The adjustable-rate mortgage share of total applications rose to nearly 10%, the highest since October 2025.
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Mortgage rates continued to climb higher last week, dampening demand for loans from both current homeowners and potential home buyers. They also pushed consumers to riskier loans that offer lower rates.Total mortgage application volume dropped 2.3% from the previous week, according to the Mortgage Bankers Association's seasonally adjusted index. The weekly average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $832,750 or less, increased last week to 6.56% from 6.46%, with points decreasing to 0.60 from 0.63, including the origination fee, for loans with a 20% down payment.
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