Homeowners and buyers have again been lured back into the mortgage market – a sign that consumers are chomping at the bit to take advantage of lower rates.
Applications for purchase loans and mortgage refinances surged 20% in the week ended April 4 compared to the previous week, according to the latest data from the Mortgage Bankers Association.
The trade group measures mortgage activity and tracks refinance and purchase loans on a weekly basis using its market index. Last week’s surge drove that index to its highest level since September 2024.
The increased demand came from homeowners looking to refinance and homebuyers seeking to purchase a home. Applications to refinance mortgages increased 35% on a weekly basis and 93% compared to the same week one year ago, reaching their highest level in six months. Applications for purchases climbed 10% compared to the previous week and 24% on a yearly basis.
Joel Kan, the MBA’s vice president and deputy chief economist, said the increase occurred during “a volatile week when economic uncertainty caused rates to drop across the board.”
“Both homebuyers and refinance borrowers were quick to take advantage of this dip in rates,” he said.
Tariff uncertainties could push mortgage rates higher
However, the burst of activity could be short-lived.
As Kan pointed out, mortgage rates softened because of “economic uncertainty” that has persisted as the White House toes the line of a global trade war, announcing tariffs on imports from some of the United States’ biggest trade partners.
That’s caused many investors to pull their money out of the stock market and instead invest in the treasury market, a move that pushes mortgage rates lower. At least at first.
“The good news for the real estate market is that mortgage rates are plummeting,” Melissa Cohn, regional vice president of William Raveis Mortgage, said in a statement last week. “However, when the higher costs of goods start to push up the rate of inflation, it is quite possible that rates will go back up. I expect to be on a mortgage rate roller coaster for the next few months.
Mortgage rates have already started to increase on a daily basis, according to data from Mortgage News Daily. Though daily measures of rates are more volatile, they can often forecast the direction that averages will move.
As of Tuesday afternoon, the 30-year, fixed-rate mortgage and the 15-year, fixed-rate mortgage had increased to some of the highest rates of the year as lenders “were forced to increase rates in response to bond market weakness,” Matthew Graham, chief operating officer at Mortgage News Daily wrote in a post on Monday.