Lower rates spur renewed homebuyer mortgage demand

Borrower demand is showing signs of a rebound after a slow start to the spring homebuying season.

The Mortgage Bankers Association's index measuring borrower demand increased 7.9% in the week ended Friday, according to data released on Wednesday. It's the second week of positive demand in a row — a turnaround after a month of weakened activity in March.

That overall increase was driven by strength in both the refinance and purchase markets. Applications for refinances rose 6% compared to the previous week and were 53% higher than the same time last year.

Homebuyers, too, returned to the market: Purchase applications increased 12% during the week, and they were 14% higher than this time in 2025.

The spike in demand comes as mortgage rates have settled near weekslong lows.

At the start of the year, it seemed as though borrowers were finally going to see the long-awaited reprieve in the mortgage market; by the end of February, the 30-year, fixed-rate mortgage was below 6%. That all changed with the start of the war in Iran at the end of February, though.

The conflict — and resulting economic disruptions, mostly driven by rising oil prices — sent mortgage rates about 50 basis points higher in five weeks. It was a jarring increase that put significant downward pressure on borrower demand, as many purchasers and refinancers alike chose to wait rather than accept a higher rate.

Now, though, that pattern of rapid increases in borrowing costs has abated, at least temporarily. At the end of last week, daily mortgage rates dipped to their lowest level in about a month. As of Thursday, the average 30-year, fixed-rate mortgage was at 6.3%.

Since then, daily average rates have inched barely higher, but that's yet to be reflected in any data — and it might not have been enough of an increase to disrupt borrower activity, especially because other parts of the market are moving in favor of homebuyers.

"Despite the geopolitical uncertainty, housing demand is being supported by a still resilient job market, and homebuyers are experiencing a buyer’s market in most of the country given the higher levels of inventory relative to last year," Mike Fratantoni, MBA's senior vice president and chief economist, said in a statement on Wednesday.

Further evidence of that renewed homebuyer demand came from the National Association of Realtors. On Tuesday, the trade group reported a 1.5% increase in pending home sales — in other words, deals with a signed contract but yet to be finalized — between February and March.

The increase, according to NAR Chief Economist Lawrence Yun, is the result of strong buyer demand and an increase in the number of for-sale properties. Together, those two shifts seemingly overrode the challenges presented by higher mortgage rates.

"Contract signings rose in March despite higher mortgage rates, pointing to pent-up housing demand," Yun said in a statement. "A greater supply of inventory will help translate that demand into more home sales.”