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Economic uncertainty and rate volatility continue to put a damper on the spring homebuying season, with demand for purchase mortgages dropping by a seasonally adjusted 7 percent last week compared to the week before, the Mortgage Bankers Association reported Wednesday.
The MBA’s Weekly Applications Survey showed requests to refinance were down 20 percent last week when compared to the week before, but up 43 percent from a year ago.
Joel Kan
“Overall mortgage application activity declined last week, as rates increased to their highest level in two months,” MBA Deputy Chief Economist Joel Kan said in a statement. “The 30-year fixed rate rose for the second straight week to 6.9 percent, an almost 30-basis-point increase over two weeks.”
It was the second consecutive weekly decline in purchase loan applications, which dropped by a seasonally adjusted 5 percent during the week ending April 11.
Mortgage rates on the rebound
At 6.83 percent on Tuesday, rates on 30-year fixed-rate mortgages were 35 basis points higher than a 2025 low of 6.48 percent registered on April 8, according to rate lock data tracked by Optimal Blue. But mortgage rates have a ways to go before retracing the 2025 high of 7.05 percent seen Jan. 14.
Mortgage rates sank to historic lows during the pandemic, with borrowers locking in rates under 3 percent during much of 2020 and 2021.
After soaring to a post-pandemic high of 7.83 percent in October 2023, rates for 30-year fixed-rate mortgages gradually descended to a 2024 low of 6.03 percent on Sept. 17 as investors anticipated the Fed would start cutting rates.
Forecasters at Pantheon Macroeconomics say tariffs imposed by the Trump administration are lifting manufacturers’ costs, but disinflation in the service sector is likely to prompt the Federal Reserve to resume cutting short-term interest rates in June.
“The bond market sell-off since April 2 has pushed up typical yields on mortgage-backed securities by about 35 basis points, which is already feeding through to rates offered to prospective homebuyers,” Pantheon economists said Wednesday in their latest U.S. Economic Monitor. “Meanwhile, mounting worries about the labor market, evident in the recent consumer surveys, will reduce the pool of potential homebuyers further, especially if the jobs market weakens over the next few months.”
Pantheon forecasters expect the Fed to cut rates three times this year, by a total of 75 basis points.
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