The mortgage market remains at a standstill as elevated borrowing costs keep some homebuyers out of the market.
Mortgage applications decreased 1% in the week ended Friday, according to data released on Wednesday by the Mortgage Bankers Association. It's the second consecutive week of demand slowdown, but the drop is smaller than in previous weeks this summer.
That overall decline was driven by a 2% drop in refinance demand and a 2% slowdown in purchase demand. Compared to a year ago, refinance demand is down 17%, while purchase demand declined 5%.
Mortgage rates still elevated
The current slowdown in borrower activity comes as mortgage rates remain elevated, creating a sort of deadlock as homebuyers and owners look for affordable ways to maneuver in today's market.
The mortgage market saw some of its lowest borrowing rates in years at the start of 2026 — a short-lived trend that gave way to a spring and summer defined by volatile and rapidly rising mortgage rates.
Since the beginning of June, the average 30-year, fixed-rate mortgage, as measured by Freddie Mac on a weekly basis, has risen by nearly 20 basis points. That increase appears even starker when looking at daily measures of mortgage rates, which tend to fluctuate more than weekly measures.
As of Thursday, the weekly 30-year, fixed-mortgage was averaging 6.65%. It marked a slight decrease from the previous week, but it's a higher average than the same time last year, according to Freddie Mac data. Economists and experts largely expect that rates will stay around that average through the end of the year.
"We don't see a huge difference from now to the end of the year," Destinee Stice, vice president of loan origination at New Day USA, told Homes.com News in an earlier interview. "Rates are pretty set where they are. I think the 6s are probably where we're staying."
Signs borrowers are adjusting
Even as mortgage demand appears to be stagnating — if not slowing — there are early signs that borrowers are adjusting to today's rate environment.
Homes.com data revealed that in July, home prices rose 2.6% despite strong inventory growth and obstacles in the mortgage market. Brad Case, chief residential economist at Homes.com, says it's indicative of a larger shift.
"Mortgage rates rose substantially between late February and late July, but the mortgage lock-in effect appears to be easing, and more owners have been willing to put their homes on the market," Case said in a statement. "Buyers, too, showed a greater willingness to transact at higher mortgage rates.”
In other words, if buyers and sellers continue to grow comfortable with elevated borrowing costs, it could mean a busier fall housing market.
"It truly is a surprisingly strong market," Case added in an email to Homes.com News, "and it seems to be extending the normal peak of the homebuying season."
This article was originally reported by Moira Ritter for Homes.com News.