Mortgage Applications Rise Slightly After Recent Decline

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Mortgage applications inched up by 1.1% for the week ending June 20, 2025, according to the Mortgage Bankers Association (MBA). This increase follows a decline the previous week. The Market Composite Index, which measures mortgage loan application volume, rose by this percentage on a seasonally adjusted basis, though it decreased by 10% on an unadjusted basis compared to the prior week.

Joel Kan, MBA’s Vice President and Deputy Chief Economist, attributes the rise to a combination of factors, including "the ongoing conflict in the Middle East, current economic conditions, and last week’s FOMC meeting," which resulted in slightly lower Treasury rates. However, mortgage rates still edged higher but remained within a narrow range, with the 30-year fixed rate increasing to 6.88% last week.

Key Trends in Mortgage Rates and Refinancing Activity

Despite the increase in mortgage applications, the refinance index rose by 3% from the previous week and was 29% higher than the same week one year ago. This suggests that many homeowners are taking advantage of refinancing opportunities, even as interest rates remain relatively high.

The overall share of refinance activity accounted for 38.4% of total applications, a slight uptick from 37.3% the week before. This indicates that refinancing remains an attractive option for some homeowners. However, it's important to note that the adjustable-rate mortgage (ARM) share has decreased to 6.9% of total applications, highlighting the growing trend toward more stable, fixed-rate loans.

FHA and VA Loan Activity

Another notable development is the increased activity in FHA (Federal Housing Administration) loans, which now represent 19.3% of total applications, up from 17.8% the previous week. On the other hand, VA (Veterans Affairs) loan applications saw a slight decline, dropping from 12.1% to 11.7%.

These trends suggest a shift in buyer preferences, as FHA loans become more appealing to first-time buyers or those with lower credit scores, while VA loan activity sees a subtle decline.

Mortgage Rate Trends

The average contract interest rate for 30-year fixed mortgages with conforming loan balances increased to 6.88% from 6.84%, with points decreasing to 0.63 from 0.66 for 80% loan-to-value ratio (LTV) loans. Meanwhile, the 15-year fixed rate continued its gradual decline, now sitting at 6.11%. These rate changes reflect ongoing shifts in the housing and lending market, influenced by broader economic factors such as Treasury yields.

The average loan size for home purchase applications also decreased to $436,300, the lowest since January 2025, indicating a trend toward smaller loan amounts, particularly in conventional home purchases.

The Bigger Picture for Homebuyers and Sellers

As these mortgage trends unfold, buyers and sellers should remain aware of the market's evolving nature. Rising mortgage rates may impact purchasing power, but the slight increase in applications suggests that buyers are still finding opportunities. For sellers, this could mean less competition and more stability in pricing, especially for homes that fall within more affordable price ranges.

For those considering refinancing or exploring different loan options, the increase in FHA applications and the dip in ARM activity may signal a growing preference for stability and lower-risk options, especially in uncertain economic times.

Bottomline

Considering buying or selling a home in Orange County? With the mortgage market showing slight shifts, now could be the perfect time to evaluate your options. Whether you're navigating higher rates or considering a refinance, I’m here to guide you through every step. Let’s discuss your real estate goals and find the best strategy for your next move in this dynamic market. Reach out to Whitestone Real Estate for expert advice tailored to your needs!

Reference: Dumandan, J. (2025, June 25). Mortgage Applications Today: Home Loan Applications Inch Up 1.1% After One-Week Decline. Realtor.com.