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A BIP TOO FAR: MORTGAGE RATES EDGE UP, REFI BORROWERS REBEL

The cost of financing home loans inched the teensiest bit higher last week.

But would-be borrowers, particularly those on the refi side, had no patience for it.

The average 30-year fixed contract rate USMG=ECI increased by 1 basis point to 6.58%, about where the rate's been hovering for more than a month.

Even so, it's a move in the wrong direction, and it prompted a 0.6% dip in demand for loans to purchase homes USMGPI=ECI. Refi applications USMGR=ECI, on the other hand—which accounted for a 40.6% share of the mortgage pie—dropped by 4.1%.

Combined, home loan demand softened by 2.2% last week.

"Mortgage application volume was little changed during the week of the nation's 250th Independence Day celebration,” writes Mike Fratantoni, MBA’s chief economist.

Referring to the refi dip, Fratantoni adds, “Homeowners saw little enticement to act with rates still elevated.”

The 30-year fixed rate currently sits 19 basis points below where it was during the same week a year ago.

Over that same period, purchase and refi applications have dropped by 6.3% and 4.2%, respectively.

MBA's mortgage demand data, while relatively current, is still last week's news.

Housing stocks, on the other hand, reflect where investors expect the sector to be six months to a year down the road.

With that in mind, investors' view of the sector is faltering.

While housing-related indexes—the S&P 1500 Homebuilding Index .SPCOMHOME and the PHLX Housing Sector Index .HGX—handily outperformed the broader market in the first two months of 2026, that advantage evaporated in March when the U.S.-Israeli war on Iran pushed interest rates higher, taking mortgage rates with them.

Since then, while the indexes moved in tandem with the S&P 500 through much of March and April, they have largely underperformed the broader market.

Year-to-date, the SPCOMHOME and the HGX are up 2.5% and 5.1%, respectively. For its part, the S&P 500 .SPX is up 9.6% so far this year.

(Stephen Culp)

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