In April, we’ll go deep on money and finance for a special theme month, by talking to leaders about where the mortgage market is heading and how technology and business strategies are evolving to suit the needs of buyers now. Inman’s Best of Finance returns for 2025, celebrating the leaders in this space. And subscribe to Mortgage Brief for weekly updates all year long.
Homebuyer demand for mortgages sagged last week as mortgage rates climbed back toward 7 percent on fears that tariffs will fuel inflation, and Federal Reserve Chairman Jerome Powell warned Wednesday that policymakers are also concerned that more Americans will be unemployed.
Stagflation — high inflation coupled with stagnant economic growth and elevated unemployment — hasn’t been seen since the 1970s. But that’s a situation the Fed is contemplating now, Powell said after delivering an address to The Economic Club of Chicago.
“Most of the time when the economy is weak, inflation is low and unemployment is high — and both of those call for lower interest rates to support activity and vice versa,” Powell said. “Now the labor market is still strong, but the shock that we’re experiencing … [is generating fears of] higher unemployment and higher inflation. And you know, our tool only does one of those two things at the same time. So it’s a difficult place for central banks to be in in terms of what to do.”
Major stock indexes were down Wednesday as investors digested Powell’s remarks, with the tech-heavy Nasdaq index falling 3 percent.
But increased demand for Treasurys and mortgage-backed securities helped bring rates down slightly, with yields on 10-year Treasurys falling four basis points.
Applications for purchase mortgages fell by a seasonally adjusted 5 percent last week when compared to the week before as mortgage rates climbed, Mortgage Bankers Association (MBA) Chief Economist Mike Fratantoni said in a statement.
Mike Fratantoni
“Mortgage rates moved 20 basis points higher last week, abruptly slowing the pace of mortgage application activity,” Fratantoni said, noting requests to refinance were down even more sharply, falling 12 percent from the week before.
Looking back a year, the MBA’s weekly survey of lenders showed demand for purchase mortgages was still up 13 percent, and applications to refinance were up 68 percent.
Mortgage rates on the rebound
After retreating to a 2025 low of 6.48 percent on April 8, rates on 30-year fixed-rate conforming mortgages bounced back to 6.89 percent last week, according to rate lock data tracked by Optimal Blue.
Rates on jumbo mortgages exceeding Fannie Mae and Freddie Mac’s $806,500 conforming loan limit in most markets spiked to 7.34 percent Monday but have dropped back below 7 percent.
“Given the jump in rates, more borrowers are opting for the lower initial rates that come with an ARM [adjustable-rate mortgage],” Fratantoni said.
Close to one out of 10 mortgage applications (9.6 percent) that came in last week were for ARM loans — the highest since November 2023, the MBA said.
Because borrowers who need bigger loans are even more likely to opt for an ARM, close to one-fourth (24.6 percent) of loan requests by dollar volume were for ARM loans.
The average ARM loan request was for $1.06 million, compared to $346,000 for fixed-rate loans.
Get Inman’s Mortgage Brief Newsletter delivered right to your inbox. A weekly roundup of all the biggest news in the world of mortgages and closings delivered every Wednesday. Click here to subscribe.
