The Home loan Bankers Association said general mortgage application volume dropped 8.5% in the week ended May 22 from the prior week on a seasonally changed basis, marking one of the steepest weekly pullbacks this spring. The decrease was driven mostly by a collapse in refinancing activity as mortgage rates continued their upward march.
The average agreement rate on a basic 30-year set home loan increased to 6.65%, up from 6.56% a week previously and the greatest level since August 2025. Rates on jumbo loans reached 6.68%, while FHA-backed home loans increased to 6.31%.
The jump in funding costs set off an 18% weekly decrease in refinance applications, although refinancing activity stayed modestly above year-earlier levels. Refinancing accounted for just 37.5% of total home mortgage applications, below 41.9% the previous week and the tiniest share of overall activity since mid-2025.
Joel Kan” Debtors drew back quickly as rates moved higher,” Joel Kan, the MBA’s vice president and deputy chief economist, stated in a statement, noting that re-financing need weakened across nearly every significant loan classification.
Government-backed lending showed some of the sharpest contractions. Applications for Veterans Affairs loans plunged 34% from the previous week, while FHA refinance applications dropped 18%. Standard re-finance activity also deteriorated materially.
Purchase activity, however, proved relatively resistant regardless of degrading affordability conditions. MBA’s seasonally adjusted purchase index slipped simply 0.4% from the previous week and stayed 5% above the very same period a year previously, suggesting underlying real estate need has not totally broken under the weight of raised loaning costs.
At the same time, the profile of active purchasers continued shifting toward wealthier homes. The typical purchase loan size reached a record $473,600, reflecting diminished involvement from lower-budget debtors significantly squeezed by greater monthly payments.
Adjustable-rate mortgages represented 9.4% of overall applications, down slightly from the previous week, as customers revealed limited appetite for variable-rate products despite rising fixed mortgage costs.
The share of FHA-backed applications edged down to 17.2% of overall volume, while VA-backed loans declined to 13.2%. USDA loan activity stayed very little at 0.5% of applications.
The latest data highlights the growing stress in the U.S. housing market, where raised mortgage rates continue to suppress refinancing rewards and deteriorate cost, even as minimal real estate supply and group demand offer ongoing support for home purchases.