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Mortgage applications increased for a second straight week—up 2.7% for the week ending June 27, 2025, according to the Mortgage Bankers Association (MBA). The increase comes as mortgage interest rates have continued in a downward direction with the average 30-year fixed home loan decreasing to 6.77%.
Homebuyers will be looking to see if that trend continues as the latest rate will be announced on July 3.
“Mortgage rates were lower across all loan types last week, with the 30-year fixed rate declining to its lowest level since April at 6.79 percent,” says Joel Kan, MBA’s vice president and deputy chief economist. “This decline prompted an increase in refinance applications, driven by a 10 percent increase in conventional applications and a 22 percent increase in VA refinance applications.”
The Market Composite Index, which measures mortgage loan application volume, increased 2.7% on a seasonally adjusted basis. On an unadjusted basis, the Index increased 13% compared with the previous week.
The refinance index increased 7% from the previous week and was 40% higher than the same week one year ago.
The seasonally adjusted purchase index increased 0.1% from one week earlier. The unadjusted purchase index increased 10% compared with the previous week and was 16% higher than the same week one year ago. These numbers reflect the number of mortgage applications for home purchases, adjusted for seasonal fluctuations in the housing market.
For homeowners refinancing, mortgage activity increased to 40.1% of total applications from 38.4% the previous week.
The adjustable-rate mortgage (ARM) share of activity increased to 7.8% of total applications.
FHA (Federal Housing Administration) applications decreased to 18.2% from 19.3% the week prior. Meanwhile, the VA applications increased to 12% from 11.7% the week prior. USDA applications remained unchanged at 0.5%.
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Contract rates
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) decreased to 6.79% from 6.88%, with points decreasing to 0.62 from 0.63 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $806,500) decreased to 6.78% from 6.88%, with points decreasing to 0.40 from 0.60 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.53% from 6.59%, with points decreasing to 0.76 from 0.85 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
The average contract interest rate for 15-year fixed-rate mortgages decreased again to 6.06% from 6.11%, with points decreasing to 0.67 from 0.74 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
For 5/1 ARMs (adjustable-rate mortgage), the average contract interest rate decreased this week to 5.99% from 6.16%, with points increasing to 0.60 from 0.54 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.
“As borrowers with larger loans tend to be more sensitive to rate changes, the average loan size for a refinance application increased to $313,700 after averaging less than $300,000 for the past six weeks,” explains Kan. “Purchase activity was essentially flat over the week, as overall uncertainty continues to hold homebuyers out of the market. However, purchase activity still remains 16 percent higher than last year’s pace.”
Mortgage rates calculated
Mortgage rates are calculated by various factors in the economy, and the length of your loan will also figure into the mortgage rate you qualify for.
The 30-year mortgage rate is tied to the yield of the 10-year Treasury note, according to Fannie Mae. As the yield on the 10-year Treasury note moves, mortgage rates follow.
The yield on the 10-year Treasury note is determined by expectations for shorter-term interest rates in the economy over the duration of a bond, plus a term premium.