In recent weeks, homebuyers have shown renewed interest in the housing market, responding to a decrease in mortgage rates that reached their lowest levels in several months. Mortgage News Daily tells us that the average contract interest rate for 30-year fixed-rate mortgages is currently 6.77%. That’s down marginally from the prior 6.79% for conforming loan balances of $806,500 or less. That small decrease has motivated millions of would-be homebuyers to want to get into (or back into) the market.
As we wrote in June, a favorable trend emerged that brought rates down. Since the July 4 holiday, those rates have moved up a little bit. Overall homebuyer demand is strong, driven by an expanding pool of homes for sale. Coincidentally, home prices are no longer in freefall. Joel Kan, an expert in the field, noted that “Homebuyer demand is being fueled by increasing housing inventory and moderating home-price growth.”
Even the average loan size for purchase applications has made a notable drop, now standing at $432,600. This represents the smallest average loan size since January of 2025. This change is a signal that buyers are making tradeoffs to purchase lower-cost homes as they adapt to the current economic environment.
Mortgage rates historically have had a tendency to be volatile, especially following streaks in one direction. Matthew Graham, the chief operating officer of Mortgage News Daily, explained this phenomenon: “We often tend to see slightly brisk movement in the opposite direction after experiencing a consistent trend in the other direction. The month of June was arguably such a trend, and it took rates to their lowest levels in several months.”
With mortgage rates recently ticking back downward, applications for refinancing existing home loans have surged. They’ve shot up by 9% just this week! Relative to the same week last year, these applications are 56% higher by that measure. This likely increase indicates that homeowners are responding to the recent drop in rates and cashing in on the opportunity to get more favorable financing terms.
In a market that is rapidly changing borrowers need to stay informed on the latest shifts and changes. The average 30-year fixed-rate mortgage point cost, which includes the origination fee, is holding at 0.62 points. In addition, prospective buyers are often required to make a 20% down payment when they apply for these kinds of loans.