Weekly Mortgage Demand Plummets 10% – Rates & Economy Rise
Mortgage Rates Climb as Tariffs and Economic Worries Resurface
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Renewed concerns over tariffs and the broader economic outlook have pushed Treasury yields higher, leading to an increase in mortgage rates. This shift has resulted in a meaningful drop in overall mortgage application volume, according to the latest data from the Mortgage Bankers Association (MBA).
Mortgage Application Volume Declines
Last week,total mortgage application volume saw a 10% decrease compared to the previous week. This slowdown is directly attributed to the uptick in mortgage rates, which followed a brief period of declines.
30-Year Fixed-Rate Mortgages See Rate Increase
The average contract interest rate for 30-year fixed-rate mortgages wiht conforming loan balances (up to $806,500) rose to 6.82% from 6.77%. Points remained unchanged at 0.62, including the origination fee, for loans with a 20% down payment.
“Treasury yields finished higher last week on average despite an intra-week drop, driven partly by renewed concerns of the impact of tariffs on the economy,” stated Joel Kan, vice president and deputy chief economist at the MBA. “Consequently, mortgage rates rose after two weeks of declines, which contributed to slower application activity.”
Purchase Applications Slow, Inventory Climbs
Applications for mortgages to purchase a home fell by 12% for the week. While this figure is still 13% higher than the same week last year, it represents the slowest pace seen since May. The housing market has experienced an increase in inventory since the beginning of the year. However, even potential sellers are beginning to hesitate as buyer demand softens and home prices show signs of cooling.
Jumbo Rates remain Lower Than Conventional
For the third consecutive week, jumbo mortgage rates were lower than conventional rates. Kan suggested that some financial institutions may be strategically positioning themselves for increased balance sheet lending.
Refinance Applications Dip Amid Higher Rates
Applications to refinance a home loan decreased by 7% for the week. Despite this dip, refinance applications are still 25% higher than they were during the same week last year.
“Refinance applications also dipped because of higher rates, with refinance applications falling, led by VA refinances partially reversing their previous week’s gain, dropping 22 percent,” Kan added.
Inflation Data and Future Rate Outlook
Mortgage rates continued their upward trend at the start of the current week, even with a slightly hotter-than-expected inflation report.
Matthew graham, chief operating officer at Mortgage News Daily, commented on the market’s reaction: “We knew there was a possibility of two separate reactions–one for the top line CPI numbers and one for a deeper look at the internal components. Those internals show that tariffs are having an impact even though it was a smaller impact than many forecasters were expecting.”