Demand for riskier mortgages drops, as their advantages shrink

Overall mortgage demand flattened last week, as interest rates continue to hover in a narrow range. Borrowers are also pulling back from riskier loans, as they are offering smaller advantages.

Total mortgage application volume increased 0.04% last week compared with the previous week, according to the Mortgage Bankers Association's seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $832,750 or less, decreased to 6.57% from 6.59%, with points increasing to 0.65 from 0.63, including the origination fee, for loans with a 20% down payment.

The average rate for a 5-year ARM (adjustable-rate mortgage) increased to 5.79% from 5.68%. ARMs are considered riskier because they reset to the market rate after the fixed term. They do generally offer lower rates, but the spread between ARMs and the 30-year fixed is shrinking. ARM loans accounted for just 7.6% of all applications last week, the lowest share since January and down from a high of 9.6% in mid May.

"Mortgage rates eased slightly last week as oil prices declined. As a result, mortgage applications increased modestly, with an uptick in purchase activity offse

Fuente original: CNBC Top News (https://www.cnbc.com/2026/07/01/demand-for-riskier-mortgages-drops-as-their-advantages-shrink.html)