Despite continued economic uncertainty, mortgage activity jumped last week as rates moved marginally lower — opening up a fresh window of opportunity for buyers and homeowners alike.
According to the latest data from the Mortgage Bankers Association (MBA), overall mortgage application volume increased by 11%, rebounding sharply from a 4.2% dip the week before. Both home purchase and refinance applications were up, a sign that consumers remain highly rate-sensitive in today’s volatile financial climate.
📉 Where Are Rates Now?
The 30-year fixed mortgage rate — the most common rate among U.S. borrowers — slipped to 6.84%, down from 6.89% the previous week. While this drop may seem modest, it’s enough to generate movement in the market.
MBA’s Chief Economist Mike Fratantoni noted that rates are essentially back to levels seen in early April, and that the drop came amid a complex mix of economic signals.
“The economic news last week included a negative reading for first-quarter GDP growth and further signs of contraction in the manufacturing sector, mixed with a solid employment report for April,” Fratantoni explained.
💼 Economic Context: What’s Causing Rate Fluctuations?
Here’s what’s been happening behind the scenes:
- GDP Growth Slows: First-quarter U.S. Gross Domestic Product (GDP) growth came in lower than expected, signaling a cooling economy.
- Manufacturing Sector Contracts: Data shows continued weakness in factory output, which tends to precede slower job growth and lower inflation.
- Strong Job Market: Despite signs of economic slowing, the April jobs report was solid, with healthy hiring across multiple sectors.
These mixed signals have led to uncertainty about the Federal Reserve’s next move. While former President Donald Trump has publicly called for rate cuts, markets aren’t expecting action in the near term. The Federal Open Market Committee (FOMC) is widely anticipated to hold the federal funds rate steady at 4.25% to 4.5%, where it’s been since December 2024.
🏡 What This Means for Buyers and Sellers
Even a small rate drop can have a meaningful impact on monthly mortgage payments — particularly for buyers in high-cost markets like Los Angeles. Here’s how the market responded last week:
- Conventional purchase applications rose 13%, and are up 9% compared to last year. These buyers typically seek larger loan amounts and represent a strong segment of the move-up market.
- Government purchase loans increased by 6%, with FHA applications leading the pack at 9%.
- Refinances also saw a boost — up 11% overall, with VA refinance applications soaring by 26%.
This activity suggests that many buyers who had paused their search are starting to re-enter the market — especially those who were waiting for a break in rates.
💡 Buyer Tip: Don’t Wait for the “Perfect” Rate
With inflation still not fully under control and the Fed taking a “wait-and-see” approach, there’s no guarantee that rates will fall dramatically in the near future. Acting when the market gives you a brief advantage — like now — can help you:
- Secure a lower monthly payment
- Afford a better home
- Build equity sooner
And remember: you can always refinance if rates drop significantly later.
📍 Los Angeles Market Spotlight
In local markets like Sherman Oaks, Studio City, Encino, and Calabasas, buyer interest remains high, particularly for updated single-family homes and condos in secure communities. With limited inventory and ongoing competition, a small shift in rates could give proactive buyers the upper hand.For homeowners, it’s also a smart time to consider refinancing or unlocking equity for renovations or investment.