Weekly mortgage demand plummets 10%, as rates and economic concerns rise

• The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $806,500 or less, increased to 6.82% from 6.77%
• Applications for a mortgage to purchase a home dropped 12% for the week and were 13% higher than the same week one year ago.
• Applications to refinance a home loan dropped 7% for the week and were 25% higher than the same week one year ago.

Renewed concerns over tariffs and the broader economy drove treasury yields higher last week, and mortgage rates followed. As a result, total mortgage application volume dropped 10% last week compared with 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, $806,500 or less, increased to 6.82% from 6.77%, with points remaining unchanged at 0.62, including the origination fee, for loans with a 20% down payment.

“Treasury yields finished higher last week on average despite an intra-week drop, driven partly by renewed concerns of the impact of tariffs on the economy. As a result, mortgage rates rose after two weeks of declines, which contributed to slower application activity,” said Joel Kan, MBA's vice president and deputy chief economist.

Applications for a mortgage to purchase a home dropped 12% for the week and were 13% higher than the same week one year ago. That was the slowest pace since May. The housing market has seen inventory climb since the start of the year, but even potential sellers are starting to pull back, as buyer demand retreats and home prices soften.

Jumbo rates were lower than conventional rates for the third straight week, as some depositories may be positioning themselves for growth in balance sheet lending, according to Kan.

Applications to refinance a home loan dropped 7% for the week and were 25% higher than the same week one year ago.

“Refinance applications also dipped because of higher rates, with refinance applications falling, led by VA refinances partially reversing their previous week's gain, dropping 22 percent,” said Kan.

Mortgage rates continued to move higher to start this week, despite a slightly hotter-than-expected read on inflation.

“We knew there was a possibility of two separate reactions--one for the top line CPI numbers and one for a deeper look at the internal components. Those internals show that tariffs are having an impact even though it was a smaller impact than many forecasters were expecting,” wrote Matthew Graham, chief operating officer at Mortgage News Daily.