Weekly mortgage demand jumped 20% last week, as tariff volatility briefly tanked rates

Volatility in financial markets caused a sharp drop in mortgage interest rates last week, which resulted in a big spike in mortgage demand.

Total mortgage application volume jumped 20% last week compared with the previous week to the highest level since September 2024, 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, decreased to 6.61% from 6.70%, with points increasing to 0.63 from 0.62, including the origination fee, for loans with a 20% down payment. The rate is 40 basis points lower than the same week one year ago.

While the weekly drop wasn’t that large, it was the lowest rate since last October. That headline may have spurred current homeowners with higher rates to move quickly. Applications to refinance a home loan increased 35% from the previous week and were 93% higher than the same week one year ago. Part of those large percentage increases is simply that the volume is still so low that any move is outsized.

Much of the demand came from borrowers with larger loans, as they can get a bigger benefit from refinancing to a lower rate. The average refinance loan size rose to its second highest in the survey at $399,600.

Applications for a mortgage to purchase a home increased 9% for the week and were 24% higher than the same week one year ago. Purchase demand was at the highest level since January of 2024.

Homebuyers are still facing higher prices, despite more listings on the market. That may be why the share of adjustable-rate mortgage applications also rose last week to 8.6% of total applications from 5.4% the previous week. The average contract interest rate for 5/1 ARMs decreased to 5.93% from 6.04%, for loans with a 20% down payment, crossing into that emotionally significant 5% range.

The increase in mortgage demand, however, may be short-lived, as mortgage rates shot higher to start this week. A separate survey from Mortgage News Daily had rates rising 25 basis points Monday and Tuesday, erasing all of last week’s decline and more.

“Additional tariff updates can certainly still cause volatility, but likely not on the scale seen over the past few days,” said Matthew Graham, chief operating officer at Mortgage News Daily. “The safest bet would be to focus on this week’s inflation data, with Thursday’s CPI and Friday’s PPI both having a strong track record of influencing rate momentum.”