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Homebuyers came out in force again last week as mortgage rates found some stability, with demand for purchase loans climbing for the second week in a row, according to a weekly survey of lenders by the Mortgage Bankers Association.
The MBA’s Weekly Mortgage Applications Survey showed purchase loan applications were up by a seasonally adjusted 2 percent last week when compared to the week before, and up 18 percent from a year ago.
“Last week saw steadier mortgage rates, as the [Federal Reserve] meeting played as predicted, and market movements led to a small two-basis point increase in the 30-year conforming rate to 6.86 percent,” MBA Chief Economist Mike Fratantoni said in a statement.
While refi applications were essentially unchanged from the week before, falling by 0.4 percent, requests to refinance were up 44 percent from a year ago.
Mike Fratantoni
“The news for the week was the growth in purchase applications,” Fratantoni said. “Despite the economic uncertainty, the increase in home inventory means there are additional properties to buy, unlike the last two years, and this supply is supporting more transactions.”
Nationwide, there were 31 percent more homes for sale in April than there were a year ago, according to Realtor.com data. The 959,251 active for-sale listings that homebuyers had to choose from last month surpassed April 2020 levels, marking a new post-pandemic high.
Federal Reserve policymakers let a key short-term interest rate stand last week and are no longer expected to start cutting rates in June due to uncertainties over the Trump administration’s future moves on tariffs, immigration, taxation and regulation.
Administration officials have rolled out new or revised tariff policies 55 times this year, according to a tariff tracker maintained by the law firm Reed Smith.
The Trump administration on Monday announced a 90-day pause on a “reciprocal tariff” on goods from China announced April 2, reducing the effective tariffs on many Chinese imports from 145 percent to 30 percent.
The news sent stock markets and mortgage rates higher, with investors less fearful of a recession but still wary of inflation.
Monday’s reduction of tariffs on Chinese imports, and a trade deal with the United Kingdom, leaves the overall average effective tariff rate on U.S. imports at 17.8 percent — the highest since 1934, according to an analysis by The Budget Lab at Yale.
The Consumer Price Index for April, released Tuesday, showed prices were up 2.3 percent from a year ago last month — closer to the Fed’s 2 percent goal than the 3 percent annual inflation registered in January.
Inflation headed in the right direction
But the April CPI report contained “early signs of tariffs pushing up goods prices, with much more to come,” forecasters at Pantheon Macroeconomics warned in their May 14 U.S. Economic Monitor.
The economic policy uncertainty generated by tariffs and a drop in consumer confidence “is forcing providers of discretionary services to reduce prices,” Pantheon economists noted. “The upward impact on inflation from the tariffs will build rapidly over the coming months, but we continue to think that services inflation will cool, providing some offset and enabling the Fed to ease policy in the second half of this year.”
The Federal Reserve’s preferred inflation gauge — the Personal Consumption Expenditures (PCE) Price Index — showed annual inflation falling from 2.7 percent in February to 2.3 percent in March. The PCE Price Index for April will be released May 30.
Futures markets tracked by the CME FedWatch tool show investors don’t expect the Fed to resume rate cuts until Sept. 17.
Mortgage rates stabilize
Rates on 30-year fixed-rate conforming mortgages have been edging up this month, but at 6.81 percent on Tuesday were still 20 basis points lower than a 2025 high of 7.05 percent registered on Jan. 14, according to rate lock data tracked by Optimal Blue.
Optimal Blue data shows rates on 30-year fixed-rate loans hit a 2025 low of 6.48 percent on April 4. Fannie Mae forecasters said last month they expect mortgage rates to come down to 6.2 percent by the end of this year and to 6 percent next year.
Purchase mortgage demand rises
Source: Mortgage Bankers Association Weekly Applications Survey.
At 166.5 as of May 9, the MBA’s seasonally adjusted purchase index showed homebuyer demand for mortgages was up 30 percent from a 2025 low of 127.7 registered on Jan. 3. The index was benchmarked at 100 in March 1990. Applications for purchase loans had previously picked up 11 percent during the week ending May 2.
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