Insights 
VT 
US Mortgage Bankers Association data for the week ending 30 May revealed a 3.9% decrease in mortgage applications, compared to a 1.2% drop the previous week. Both purchase and refinance activity experienced declines, affecting overall market dynamics.
The market index fell to 226.4 from 235.7, while the purchase index decreased from 162.1 to 155.0. Meanwhile, the refinance index also slipped from 634.1 to 611.8, indicating reduced refinancing interest.
Mortgage Rates And Market Challenges
The average 30-year mortgage rate slightly decreased to 6.92% from 6.98% the week before. These persistent high rates continue to pose challenges for the mortgage market.
That weekly release showed a sharper contraction in mortgage activity than we had seen just a week prior, with both homebuyers and current owners pulling back amid what’s still an elevated borrowing environment. Purchase and refinance volumes retreated together, and while the change in average 30-year mortgage rates was minor—down from 6.98% to 6.92%—it clearly wasn’t enough to spur fresh demand.
This drop in the overall market index marked the lowest level in nearly a month, reinforcing how rate-sensitive the housing financing market remains. With refinancing volume in particular dipping further into the 600s, it points to a broad lack of motivation for homeowners to swap their existing mortgages, many of which were likely locked in at much lower rates back in 2020 or 2021.
For us, the declining momentum in both sides of the mortgage space underlines a fairly rigid demand structure. Rates remain too high to attract fresh buying, yet not high enough to shift sentiment strongly since changes have been marginal. That makes conditions for fixed-income assets more stable than reactive. It’s a story of stagnation rather than one of sudden reversal.
Inflation And Market Sensitivity
Powell, speaking earlier last week, noted that inflation appeared to be easing only gradually. Labour market resilience, however, remains largely intact, making the Fed’s next steps harder to anticipate in the near term. It introduces a form of calm that doesn’t necessarily imply comfort—short rates are likely to stay put while long yields remain subject to drift, driven more by shifts in inflation expectations than by monetary tightening itself.
Given this, we aren’t expecting large adjustments in rate expectations based on current mortgage or refinancing trends alone. However, the reluctance from borrowers to move back into the market might limit upward pressure on yields from consumer-led growth. Fewer applications translate to slower housing turnover, which may weigh slightly on broader consumer credit metrics in the medium term.
With the 10-year showing only a modest retreat alongside this soft print, it’s clear bond markets remain focused beyond housing data, keeping their gaze fixed on inflation readings and payroll growth as the next catalysts. For now, the muted reaction in treasuries tells us that expectations for the Fed’s stance haven’t swung meaningfully. That implies a relatively steady front-end.
Any trading over the next few weeks would do better to watch incoming inflation prints rather than backward-looking housing figures. The shift in applications, while notable, carries limited firepower without confirmation from price pressures in broader categories. We do not anticipate the mortgage market alone to shift sentiment in rate markets. Conditions seem to favour premium capture and carry strategies over position-driven bets on directional moves—at least in the near term.
Sensitivity remains more pronounced at the long end, especially if inflation surprises to the upside. In that case, yields can jump quickly, triggering duration stops, particularly in leveraged portfolios. Preparation means knowing where the tail risks sit and managing exposure accordingly. These figures provided a hint, but not a signal. The main signal will come when price data confirms, or contradicts, this softening credit appetite.
