Mortgage refinance demand drops 18% as rates hit highest level since August

Homes in Rancho Cucamonga, California, US, on Saturday, May 9, 2026. Kyle Grillot | Bloomberg | Mortgage rates continued their climb last week, making it harder for current homeowners to save on a refinance. Potential homebuyers also pulled back a bit, causing total mortgage application volume to drop 8.5% last week compared with the previous week, according to the Mortgage Bankers Association's seasonally adjusted index. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $832,750 or less, increased to 6.65% from 6.56%, with points rising to 0.65 from 0.60, including the origination fee, for loans with a 20% down payment. The 30-year fixed rate has climbed 30 basis points over the past five weeks to its highest level since August 2025. Refinance demand took the hardest hit, with those applications down 18% for the week. They were still 19% higher than the same week one year ago. Last year at this time the 30-year fixed rate was 33 basis points higher. Get Property Play directly to your inbox CNBC's Property Play with Diana Olick covers new and evolving opportunities for the real estate investor, delivered weekly to your inbox. Subscribe here to get access today . "There were large declines in applications across loan types – conventional refinances were down 14 percent, along with an 18 percent decrease for FHA applications and a 34 percent decrease for VA applications. …