US Mortgage Demand Hits Annual Low Amid Geopolitical Volatility

Total mortgage application volume declined by 0.8% last week, reflecting a cautious approach from both homebuyers and homeowners amid ongoing economic uncertainty. The downturn is largely attributed to geopolitical instability stemming from the conflict with Iran, which has kept mortgage rates elevated and dampened consumer confidence. This volatility has led to the first annual decline in purchase applications since January 2025, with volume falling 7% compared to the same week last year. Similarly, applications to refinance a home loan dropped 3% for the week and 4% year-over-year, marking the lowest pace of refinance activity since December 2025. The average contract interest rate for a 30-year fixed-rate mortgage dipped slightly to 6.51% from 6.57%, though this was insufficient to stimulate broad market activity. However, some segments showed resilience; FHA purchase applications rose 5% weekly, supported by rates approximately 30 basis points lower than conventional mortgage options. Market participants are now looking toward a potential shift in trend following President Donald Trump's announcement of a two-week ceasefire. The news triggered a sharp decline in the U.S. 10-year Treasury yield, which typically serves as a benchmark for mortgage pricing, suggesting that rates may move lower in the immediate term.