Rising mortgage rates cause surge in demand for riskier loans

Key points

• Prospective buyers arrive during an open house in Rancho Cucamonga, California, US, on Saturday, May 9, 2026. Mortgage rates continued to climb higher last week, dampening demand for loans from both current homeowners and potential homebuyers.
• They also pushed consumers to riskier loans that offer lower rates.
• Total mortgage application volume dropped 2.3% from the previous week, according to the Mortgage Bankers Association's seasonally adjusted index.
• The weekly average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $832,750 or less, increased last week to 6.56% from 6.46%, with points decreasing to 0.60 from 0.63, including the origination fee, for loans with a 20% down payment.
• That is the highest rate in seven weeks.