Since May, interest rates have reached their highest level, and mortgage demand is showing signs of uncertainty.

• The interest rate for 30-year fixed-rate mortgages with conforming loan balances rose from 6.99% to 7.09%.
• The number of applications to refinance a home loan increased by 22% compared to the previous week.
• The number of mortgage applications for purchasing a home decreased by 2% compared to the previous year's same week.

Despite higher interest rates, mortgage demand increased this year compared to last year. The Mortgage Bankers Association's seasonally adjusted index shows a 7% increase in total mortgage application volume last week compared to the same week the previous year.

The interest rate for 30-year fixed-rate mortgages with conforming loan balances increased by 3 basis points to 7.09%, while the points decreased by 3 basis points to 0.65 (including the origination fee) for loans with a 20% down payment. This rate is 34 basis points lower than one year ago.

Inflation concerns and high budget deficits caused bond yields to rise in the U.S. and abroad, resulting in a fifth consecutive week of higher mortgage rates. The 30-year fixed rate is now at 7.09%, its highest level since May 2024, according to Joel Kan, MBA's vice president and deputy chief economist.

The number of applications to refinance a home loan increased by 22% compared to the same week last year, despite the higher interest rates. However, the low volumes mean that the percentage increase is exaggerated.

The number of mortgage applications for purchasing homes decreased by 2% compared to the same week last year. Despite the increase in inventory, home prices remain unyielding. Most of the additional inventory is due to homes remaining unsold for longer periods, rather than new listings being added.

The state of the mortgage market cannot be accurately determined based on the outsized weekly comparisons for mortgage applications last week, which were influenced by the holidays.

"During this season, application volumes tend to be more unpredictable, so it may be more advantageous to concentrate on the magnitude rather than the percentage change," Kan stated.

This week, mortgage rates are stable, but they may change significantly on Wednesday based on the release of the Consumer Price index, which indicates inflation.