a for sale sign outside a house in albany california us on tuesday may 31 2022 homebuyers are facing a worsening affordability situation with mortgage rates hovering around the highest levels in more than a decade mortgage rates pulled back for the second straight week last week and it was enough to get both current and potential homeowners on the phone with their lenders mortgage application volume rose 72 last week compared with the previous week according to the mortgage bankers associations seasonally adjusted index the average contract interest rate for 30year fixedrate mortgages with conforming loan balances 726200 or less decreased to 677 from 681 in the prior week with points decreasing to 065 from 066 including the origination fee for loans with a 20 down payment applications to refinance a home loan rose 6 for the week but were 41 lower than the same week one year ago while rates pulled back they are still more than a full percentage point higher than they were a year ago and more than twice what they were in the first two years of the pandemic when there was a refinance boom most borrowers today have lower rates than what is currently available and therefore do not want to lose those rates even for a cashout refinance applications for a mortgage to purchase a home increased 8 for the week but were 27 lower than the same week one year ago rates that are still more than a percentage point higher than a year ago and low forsale inventory continue to constrain homebuying activity in many markets said joel kan an mba economist in a press release the average loan size on a purchase loan decreased for the third straight week as we continue to see more firsttime homebuyer activity in the purchase market mortgage rates havent moved much this week but that could change wednesday afternoon when the federal reserve announces the results of its latest policy meeting and updated rate forecasts some say the fed will use those forecasts to telegraph another rate hike or two in 2023 although the fed funds rate doesnt directly dictate mortgage rates such a move would still put quite a bit of upward pressure on interest rates of all shapes and sizes wrote matthew graham coo of mortgage news daily