Mortgage demand drops more than 10% as rates hit the highest level since October

Mortgage interest rates rose last week to their highest level since last fall, pushing demand for mortgages off a cliff. Total mortgage application volume fell 10.5% last week compared to the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.

The average contract interest rate for 30-year fixed-rate mortgages with loan balances of $832,750 or less increased from 6.30% to 6.43%; Points including the origination fee for loans with 20% down payment increased from 0.63 to 0.65.

“The threat of longer oil price hikes continued to keep Treasury yields elevated and mortgage rates finished last week higher. The 30-year fixed rate rose to 6.43 percent, 30 basis points higher than at the end of February and the highest level since October 2025,” said Joel Kan, MBA vice president and deputy chief economist. he said.

Refinancing demand, which was surging just a few months ago, is down 15% in a week. That rate was still 52% higher than the same week a year ago, when the 30-year fixed rate was 28 basis points higher. The refinancing share of mortgage activity decreased to 49.6% in total applications. For comparison, it had a 60% share in mid-January.

Mortgage applications to buy a home fell 5% this week and were just 5% higher than the same week a year ago.

“Higher mortgage rates, combined with affordability constraints and economic uncertainty, have pushed some potential homebuyers aside,” Kan added.

Adjustable-rate mortgage (ARM) activity share also increased to 8.1% of total applications. ARMs offer lower rates but carry higher risk because they can adjust after a fixed period of time.

Mortgage rates have fallen so far this week following mixed messages from President Trump and Iran’s leadership regarding warfighting negotiations. Reactions to military activity and political rhetoric in the bond market, which is tracked by mortgage interest rates, were swift, but the long-term damage was already done.

“Even if the war were to end today, there has been enough disruption to infrastructure and a large enough initial rise in energy prices to create what economists call ‘second-round effects,'” wrote Matthew Graham, chief operating officer of Mortgage News Daily. “In simpler terms, this means that inflation expectations and interest rates will not immediately return to February levels just because the war is over.”