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A jump in mortgage rates took some of the wind out of the sails of the spring homebuying season last week, with demand for purchase loans and refinancing sagging but still up from a year ago.
Applications for purchase loans were down by a seasonally adjusted 5 percent last week when compared to the week before, but were 13 percent higher than a year ago, according to a survey of lenders by the Mortgage Bankers Association.
The MBA’s Weekly Mortgage Applications Survey showed requests to refinance were also down 5 percent week over week, but up 27 percent from a year ago.
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Mike Fratantoni
“Mortgage rates jumped to their highest level since February last week, with investors concerned about rising inflation and the impact of increasing deficits and debt,” MBA Chief Economist Mike Fratantoni said in a statement. “Higher rates, including the 30-year fixed rate increasing to 6.92 percent, led to a slowdown across the board.”
Demand for purchase loans had previously been on the rise for two consecutive weeks, as homebuyers moved to take advantage of growing inventories at stable rates.
Mortgage rates headed back up
Optimal Blue data shows rates on 30-year fixed-rate loans hit a 2025 low of 6.48 percent on April 4.
At 6.89 percent on Tuesday, rates were up 41 basis points from the low for the year and only 16 basis points below a 2025 high of 7.05 percent registered on Jan. 14.
Data tracked by Mortgage News Daily showed rates on 30-year fixed-rate mortgages climbed another nine basis points Wednesday, after investors showed little appetite for 20-year Treasury bonds at auction.
Mortgage rates surged Monday after Moody’s Ratings downgraded the U.S.’s credit rating over concerns that “successive U.S. administrations” and Congress have failed to tackle the nation’s annual budget deficits and growing interest costs.
A majority of Americans shopping for homes on Realtor.com (63 percent) expect the economy will dip into a recession within a year, although many would see it as a buying opportunity, according to a survey released Monday by the official search portal of the National Association of Realtors.
Danielle Hale
“Confidence in the economy has clearly taken a hit amid ongoing headlines around trade, tariffs and rate uncertainty,” Realtor.com Chief Economist Danielle Hale said.
But well-prepared buyers who have been waiting on the sidelines “are likely motivated by personal and lifestyle needs like growing families, new jobs, or retirements, and these considerations can outweigh short-term economic uncertainties.”
In their most recent forecast, Fannie Mae economists predicted mortgage rates will drop to 6.1 percent by the end of this year and to 5.8 percent by the end of 2026.
But MBA economists have a more cautious take, forecasting that rates on 30-year fixed-rate mortgages will still be averaging 6.6 percent during Q4 2025 and 6.3 percent during Q4 2026.
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