U.S. July Federal Funds Rate Maintained at 3.75% for Fifth Consecutive Time, Three Committee Members Cast Rare Dissenting Votes

US Q3 MBA Purchase Index Falls to 159.8; Mortgage Rates Hit One-Year High, Battering Homebuying Demand

Core Overview: As of July 24, 2026 (Q3), the US MBA Purchase Index recorded 159.8, down 6.0 points from 165.8 in the previous week. This was accompanied by a 6.4% weekly contraction in overall mortgage application volume, marking the largest single-week decline in nearly two months. This indicates that after experiencing brief volatility in the previous period, the buying sentiment in the US housing market has once again encountered a direct impact from rising costs of capital, further exacerbating the wait-and-see sentiment among potential buyers. Key Details: Looking at the detailed data, high borrowing costs are broadly suppressing the mortgage market. First, the 30-year fixed mortgage contract rate, which is highly correlated with the benchmark rate, surged to 6.76%, hitting a new high in nearly a year. Second, the refinance application index, which is highly sensitive to interest rate changes, plunged 9.9% in a single week to its lowest point since May of last year; meanwhile, the volume of loan applications for new home purchases also declined by 3.6%, highlighting that both first-time homebuyers and those looking to trade up are unable to afford the current high interest rates. In-Depth Attribution: Regarding this significant drop in the purchase index, the market largely attributes it to the resilient performance of the macroeconomy unexpectedly becoming a headwind for the housing market. According to a report by Trading Economics, strong US labor market data and lingering inflationary pressures have once again reinforced expectations that the Federal Reserve will maintain tightening or even raise interest rates. The hawkish outlook on monetary policy directly pushed up long-term Treasury yields, which in turn drove mortgage rates to break upward, becoming the biggest culprit in extinguishing the liquidity in the housing market. Outlook and Risks: Looking at the short term (1-2 months), before sticky inflation eases and the Federal Reserve sends a clear signal of rate cuts, mortgage rates are likely to continue fluctuating at high levels above 6.7%, and the MBA Purchase Index is expected to struggle to break out of its bottom range. In the medium term (3-6 months), if the job market cools substantially and drives a slowdown in inflation, prompting the Federal Reserve to restart a monetary easing cycle, only then can Treasury yields be expected to fall; by then, the long-suppressed deferred homebuying demand and refinancing needs will have the opportunity to usher in a significant recovery and rebound. Web Search Reference Sources: United States MBA Mortgage Applications United States MBA Purchase Index FX.co - U.S. MBA Purchase Index Slides to 157.2, Signaling Softer Mortgage Demand