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

Mortgage rates rose last week to the highest level since last fall, and that pushed mortgage demand off a cliff. Total mortgage application volume dropped 10.5% last week from 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 conforming loan balances, $832,750 or less, increased to 6.43% from 6.30%, with points rising to 0.65 from 0.63, including the origination fee, for loans with a 20% down payment.

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

Refinance demand, which had been surging just a few months ago, dropped 15% for the week. It was still 52% higher than the same week one year ago, when the 30-year fixed rate was 28 basis points higher. The refinance share of mortgage activity decreased to 49.6% of total applications. For comparison, in mid-January it held a 60% share.

Applications for a mortgage to purchase a home dropped 5% for the week and were just 5% higher than the same week one year ago.

“Higher mortgage rates, coupled with affordability constraints and economic uncertainty, pushed some potential homebuyers to the sidelines,” Kan added.

The adjustable-rate mortgage, or ARM, share of activity also increased to 8.1% of total applications. ARMs offer lower rates but with higher risk, as they can adjust after a fixed period.

Mortgage rates seesawed so far this week, after mixed messages from President Donald Trump and Iran’s leadership on the state of war negotiations. Reactions to military activity as well as political rhetoric have been swift in the bond market, which mortgage rates follow, but the damage for the longer term has already been done.

“Even if the war were to end today, there’s been sufficient disruption to infrastructure and a big enough initial spike in energy prices to create what economists refer to as ‘second round effects,'” wrote Matthew Graham, chief operating officer at Mortgage News Daily. “In simpler terms, this means that inflation expectations and interest rates will not immediately return to February’s levels simply because the war is over.”