Weekly Mortgage Demand Jumps 20% Following Drop in Interest Rates to Lowest Level Since Last Year

Weekly Mortgage Demand Jumps 20% Following Drop in Interest Rates to Lowest Level Since Last Year

A significant decline in mortgage interest rates has spurred a surge in loan demand, with both current homeowners and potential buyers returning to the market after a slow start to the year.

According to the Mortgage Bankers Association’s seasonally adjusted index, total mortgage application volume increased by 20.4% last week compared to the previous week. This marked the first increase in three weeks and was a notably large weekly jump.

The drop in mortgage rates is clearly the driving factor. The average interest rate for 30-year fixed-rate mortgages with conforming loan balances of $806,500 or less decreased to 6.73% from 6.88%, with points falling from 0.61 to 0.60, including the origination fee, for loans with a 20% down payment. This is the lowest rate since December 2024.

“Mortgage rates fell last week due to declining consumer sentiment regarding the economy and growing uncertainty over the impact of new tariffs on imports into the U.S.,” explained Joel Kan, an economist at the MBA. “These factors led to the largest weekly decline in the 30-year fixed rate since November 2024.”

Refinance applications, which are especially sensitive to changes in interest rates, surged by 37% week-over-week and were 83% higher than the same week last year. While most homeowners still have lower rates from previous years, those who purchased homes in the last two years are now in a position to benefit from refinancing.

Mortgage applications for purchasing a home rose 9% week-over-week but were only 2% higher than the same week in 2024.

“This is typically the time of year when purchase activity picks up. We’ve seen an increase in applications this week, and they continue to run ahead of last year’s pace—indicating positive momentum as we enter the spring homebuying season,” Kan added.

Despite the positive weekly increase, purchase volume remains historically low due to high home prices, limited inventory, and economic uncertainty. The recent tariffs imposed on China, Canada, and Mexico are expected to further increase home prices, particularly for new construction.

Mortgage rates dipped slightly at the start of this week, according to a separate survey by Mortgage News Daily. On Tuesday, when the tariffs were implemented, both the stock and bond markets experienced significant fluctuations. Bond yields, which influence mortgage rates, initially dropped, but by the end of the day, both stocks and bonds rebounded, prompting most lenders to adjust rates slightly higher.

Correction: The conforming loan balance is $806,500 or less. An earlier version of this article misstated the figure.

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