Mortgage demand has surged by 20% after interest rates dropped to their lowest level since last year. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $806,500 or less decreased to 6.73%, from 6.88%. This is the first increase in three weeks and marks an outsized weekly move.
The drop in mortgage interest rates has been a major catalyst for the surge in demand, with both current homeowners and potential homebuyers flocking back to the market after a lackluster start to the year. Refinance applications jumped 37%, while purchase applications rose 9% for the week. However, buyers are still facing challenges such as high home prices, limited inventory, and uncertainty about the economy.
According to Joel Kan, an MBA economist, the decline in mortgage rates was driven by souring consumer sentiment regarding the economy and increasing uncertainty over new tariffs levied on imported goods into the US. While there are signs of a potential rebound in the housing market, historically low purchase volumes suggest that buyers still face significant headwinds.
The impact of new tariffs on home prices is also being closely watched, with experts predicting higher costs for new construction. Despite this, refinancing has become more attractive to recent buyers from the last two years who are now benefiting from lower rates. As the spring homebuying season approaches, market trends will continue to be monitored closely.
Source: https://www.cnbc.com/2025/03/05/weekly-mortgage-demand-surges-20percent-higher-after-interest-rates-drop.html