A sharp drop in mortgage interest rates led to a significant increase in loan demand, both for refinancing and purchasing homes. Mortgage application volume increased by 20.4% from the previous week, marking the first increase in three weeks. The average interest rate for 30-year fixed-rate mortgages decreased to the lowest level since December 2024, prompting more borrowers to refinance their loans. Refinance applications jumped by 37% for the week and were 83% higher than a year ago. Purchase applications also increased by 9% for the week, showing signs of a more active spring homebuying season.
Despite the positive increase in purchase volume, buyers are facing challenges such as high home prices, limited inventory, and economic uncertainty. The new tariffs imposed on imported goods from China, Canada, and Mexico are expected to raise home prices, particularly for new construction. Mortgage rates slightly decreased at the start of the week, but fluctuated as a result of market volatility caused by the tariffs.
Overall, the increase in mortgage applications indicates a renewed interest in the housing market, driven by lower interest rates. While the weekly jump in purchase volume is a positive sign, challenges remain for buyers in the form of high home prices and economic uncertainty.
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