Ryan Ratliff, real estate sales partner at Re/Max Advance Realty, shows Ryan Paredes, Left and Ariadna Paredes to homes for sale on April 20, 2023 in Cutler Bay, Florida.
Joe Raedle | Getty Images
The sharp drop in mortgage rates eventually ignited the fire under loan demand. After performing pretty bland so far this year, current homeowners and potential homebuyers have both jumped back to the market.
The number of mortgage applications increased by 20.4% last week compared to last week, according to the Mortgage Bankers Association’s seasonally adjusted index. This is not only the first increase in three weeks, but it is a weekly move.
Mortgage rates are clearly the culprit. The average contract rate for a 30-year fixed-rate mortgage (compliant with the loan balance), $806,500 or less, dropped from 6.88% to 6.73%, and points dropped from 0.61 (including the original expenses of the loan) to 0.60, and the loan was 20%. That was the lowest level since December 2024.
“Last week, mortgage rates were lowered to worsen consumer sentiment towards the economy and increasingly determined the impact on new tariffs on imported goods,” MBA economist Joel Kan Kan said in a press release. “These factors have resulted in the biggest drop in fixed interest rates in the 30-year period since November 2024.”
Refinancing applications, the most sensitive home loan to weekly interest rates, grew 37% in a week, 83% higher than the same week a year ago. Although the vast majority of borrowers today still have loans with interest rates far lower than those offered today, the recent buyers in the last two years can now benefit from refinancing.
Applications for mortgage purchases increased 9% this week, but are still 2% higher than the same week a year ago.
“It’s a period where we usually see buying activity getting bigger and bigger, and purchase applications increase in a week and continue before last year’s pace, with more green shooting as we enter the spring home buying season.”
Although weekly purchases are certainly positive, they are still very low in history. Buyers have a high increase in uncertainty about high housing prices, limited inventory and overall economic uncertainty. In China, Canada and Mexico are new tariffs Generally expect to raise housing pricesespecially for new buildings.
Mortgage rates started slightly lower this week, according to another daily survey by Mortgage News. On Tuesday, when tariffs came into effect, the stock and bond markets rode a roller coaster at bond yields, with mortgage rates coming along, falling along with stocks.
“As the day progresses, stocks and bonds bounce back in the other direction, this move is big enough to allow most mortgage lenders to regain slightly higher interest rates,” wrote Matthew Graham, chief operating officer of Mortgage News Daily.
