FHA refinances support application growth as average loan size dips

Mortgage application activity increased last week, even as average rates edged slightly higher and global uncertainty persisted due to ongoing conflict in the Middle East.
Total mortgage loan application volume increased 1.1% on a seasonally adjusted basis from the previous week, according to the Mortgage Bankers Association’s (MBA) latest Weekly Mortgage Applications Survey for the week ending June 20.
On an unadjusted basis, the Index was down 10% compared to the prior week. This week’s results were adjusted to account for the Juneteenth holiday.
“The combination of the ongoing conflict in the Middle East, current economic conditions, and last week’s FOMC meeting resulted in slightly lower Treasury rates on average,” said Joel Kan, MBA’s deputy chief economist. “However, mortgage rates still edged higher but remained in the same narrow range.”
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) rose to 6.88% from 6.84% the week before.
Kan noted that, “Applications increased slightly overall driven by FHA refinances, but conventional applications saw declines over the week. The average loan size for purchase applications declined to $436,300, the lowest level since January 2025, driven by decreasing conventional purchase loan sizes.”
MBA’s refinance index posted a 3% increase from the previous week and was 29% higher compared to the same week one year ago. However, the seasonally adjusted purchase index ticked down 0.4% from one week earlier, while the unadjusted purchase index dropped 11% week over week but remained 12% higher than the same period last year.
According to Fannie Mae, the dollar volume of refinance applications decreased by 6.6 percent week over week for the holiday-impacted week ending June 20, 2025. Despite this, the RALI dollar volume is up 23.5 percent compared to the same week in 2024.
Refinances made up a larger share of total mortgage activity, increasing to 38.4 percent from 37.3 percent the previous week. The share of adjustable-rate mortgage (ARM) activity decreased to 6.9 percent of total applications.
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Among government-backed loans, the FHA share increased to 19.3 percent from 17.8 percent the previous week. The VA share fell to 11.7 percent from 12.1 percent, while the USDA share slipped to 0.5 percent from 0.
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