Key takeaways
- Mortgage applications fell 2.5% in the week ended Friday, marking a third straight weekly decline, according to the Mortgage Bankers Association.
- Ongoing geopolitical uncertainty—especially tied to the war in Iran—has pushed the 30-year fixed mortgage rate to its highest weekly average of 2026, sidelining borrowers.
- Although demand remains higher than a year ago, elevated borrowing costs and tighter household budgets are limiting affordability, according to Brad Case, Homes.com chief residential economist.
Mortgage borrower demand has weakened further amid persistent market uncertainty.
In the week ended Friday, mortgage applications fell 2.5% compared to a week earlier after an adjustment for the Memorial Day holiday, according to data released Wednesday by the Mortgage Bankers Association. It's the third consecutive week that the measure has decreased.
That overall decline was driven by a 2% decrease in refinance activity, marking the softest week of demand since June 2025. Similarly, purchase applications fell 3%, falling to the slowest pace since April.
Even so, both refinances and purchases continue to outpace last year's demand when mortgage rates were roughly 30 basis points higher.
War-driven uncertainty continues to hamper the mortgage market
The slowdown is just the latest sign of how economic and geopolitical uncertainty — mostly driven by the war in Iran — is unsettling the mortgage market.
The 30-year, fixed-rate mortgage is sitting at its highest weekly average of 2026 after rapidly climbing roughly 20 basis points in May.
That run-up was mostly caused by back-and-forth on peace negotiations in the Middle East and the resulting continued upward pressure on energy prices.
There are emerging signs that the recent increases in that average could be slowing — daily mortgage rates, for example, have eased in recent days — but it's likely that, at least in the short term, rates will remain elevated.
That's expected to keep borrower activity muted, according to Brad Case, chief residential economist for Homes.com.
"At today’s rates, buyers have less room for rising insurance premiums, higher grocery bills or increased commuting costs, so when their disposable income dips even slightly, it doesn’t just dent their confidence — it directly limits how much house a buyer can comfortably afford," he wrote in an analysis.