Mortgage Demand Surges as Rates Drop for the Sixth Consecutive Week

Lower Interest Rates Fuel a Strong Start to the Spring Homebuying Season

Mortgage rates have hit their lowest levels since October of last year, sparking a significant uptick in demand. After a notable surge in applications the previous week, homebuyers and homeowners alike took advantage of more favorable financing conditions once again.

According to the Mortgage Bankers Association (MBA), total mortgage applications jumped 11.2% week over week, reflecting increased interest from both buyers and those looking to refinance.

Rates Drop, Demand Rises

The average interest rate for a 30-year fixed-rate mortgage on conforming loan balances ($806,500 or less) dropped to 6.67% from 6.73%. While points increased slightly to 0.63 from 0.60 (including origination fees for a 20% down payment), the rate was still 17 basis points lower than the same time last year.

“Mortgage rates declined for the sixth consecutive week, with the 30-year fixed rate dropping to 6.67%, the lowest level since October 2024,” said Joel Kan, an MBA economist.

Refinance Boom and Home Purchase Activity

Refinance applications saw a 16% jump from the previous week and an astounding 90% increase compared to last year. While most homeowners currently hold mortgages at lower rates, those who purchased within the last two years—when rates were higher—are now finding opportunities to save by refinancing.

Home purchase applications also climbed, increasing 7% week over week and 4% compared to the same time last year. Government-backed loans saw an even larger surge, with FHA purchase applications rising 11%, aided by a rate drop to 6.34%. The average loan size for home purchases also increased, hitting $460,800—the highest recorded since 1990.

What’s Next for Mortgage Rates?

Mortgage rates started this week on a stable note, initially falling on Monday but rising again on Tuesday. The next major factor influencing rate movements will be the release of the Consumer Price Index (CPI) on Wednesday, which measures inflation. If inflation shows signs of cooling, rates could continue their downward trend, fueling even more demand in the housing market.

Final Thoughts

As we enter the spring homebuying season, the recent decline in rates is providing a boost to both buyers looking to enter the market and homeowners eager to refinance. While rates remain elevated compared to pre-pandemic levels, any sustained drop could provide much-needed relief for affordability. Keeping an eye on economic data and inflation trends will be key in determining where mortgage rates head next.