Mortgage demand dips over Memorial Day, but yearly gains are a sign of market momentum

Mortgage applications decreased by 3.9% for the week ending May 30, according to data from the Mortgage Bankers Association (MBA). On an unadjusted basis, the index fell 15% during the week marked by the Memorial Day holiday.

But economists and loan officers say the year-to-date landscape looks much better.

“Mortgage applications decreased over the week, but continued to exhibit annual gains, with purchase applications running 18% ahead of last year’s pace,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement. 

Some top LOs have also observed an increase in volume this year, despite volatility in the market. Chicago-based Benjamin Cohen, who works at Rate, reported a 36% year-over-year increase in his business volume, which includes 20% to 25% for nonqualified mortgages (non-QMs).

“People know interest rates aren’t 3% anymore, so I don’t think that’s an issue. And I don’t think the tariff increases [imposed by the Trump administration on other countries] are really having an impact on the housing market,” Cohen said.

At the end of the day, according to Cohen, consumers understand that if rates are not at 3% but their families are growing and they need to move, there’s a clear message.

“The rate doesn’t mean anything if it’s not working for you,” he said. Cohen usually emphasizes borrower needs, including home prices that are affordable, down payment capacity and monthly spending comfort.

Mortgage rates have hovered between 6.8% and 7% since April. Last week, rates for most loans moved lower, according to Kan.

MBA data shows the average rate for 30-year fixed-rate conforming mortgage contracts (loan balances of $806,500 or less) was 6.92%, down from 6.98% the previous week. Jumbo loans (greater than $806,500) also averaged 6.92%, a slight decrease from 6.93% the week before.

The refinance index decreased by 4% from the previous week but remained 42% higher than the same week one year ago. Meanwhile, the seasonally adjusted purchase index declined by 4% from the prior week. The unadjusted purchase index dropped 15% week over week but was still 18% higher than the same week last year.

The refinance share of mortgage activity rose to 35.2% of total applications, up from 34.6% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 7.1%. ARMs typically gain market share when rates are elevated, as borrowers can access lower initial rates compared to traditional fixed-rate mortgages.

By product, the Federal Housing Administration (FHA) share of total applications continued to tick up, increasing from 17.9% to 18.7% during the week. The U.S. Department of Veterans Affairs (VA) share of applications increased 30 basis points to 12.6% while the U.S. Department of Agriculture (USDA) share remained unchanged at 0.5%.  

“Government purchase applications were little changed over the week driven by a slight increase in FHA purchase applications,” Kan said. “Refinance activity fell across both conventional and government segments and the overall average refinance loan size was the smallest since July 2024, as potential borrowers hold out for larger rate drops.”