A prospective buyer and a real estate agent look through a window in a bedroom during an open house at a home in Seattle, Washington, US, on Sunday, Jan. 18, 2026.
David Ryder | Bloomberg | Getty Images
Much like the news from the ongoing war in Iran, interest rates have been all over the map. That caused a split in demand for mortgages last week, with refinancing coming down and homebuyer demand rising with the kickoff of the spring market.
Total mortgage application volume rose 3.2% for the 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, $832,750 or less, increased to 6.19% from 6.09%, with points increasing to 0.58 from 0.52, including the origination fee, for loans with a 20% down payment.
“Financial markets were volatile last week amid the ongoing turmoil in the Middle East,” said Mike Fratantoni, MBA’s chief economist in a release. “Borrowers in recent weeks were able to get 30-year conforming rates below 6 percent, but with the current volatility, longer-term rates have moved up.”
Applications to refinance a home loan rose just 0.5% from the previous week and were 81% higher than the same week one year ago.
The seasonally adjusted Purchase Index increased 7.8% for the week and were 11% higher than the same week one year ago. With the winter weather in much of the country finally moderating, buyers are starting to come out, but prices are still high, prompting some to seek lower down payment loans.
“Purchase activity increased last week, particularly for FHA loans, which moved up more than 11 percent,” added Fratantoni. “More inventory on the market is supporting more transactions.”
While there is more inventory, it is still well below pre-pandemic levels. A report on closed sales in February from the National Association of Realtors showed just a 3.8-month supply of homes for sale. Six months is considered a balanced market between buyer and seller.
Consumers are also looking more to adjustable-rate loans, which offer lower interest rates but at a higher risk. The ARM share of activity increased last week to nearly 9% of total applications.
Mortgage rates moved slightly lower to start this week, according to a separate survey from Mortgage News Daily. While bond yields have already been seesawing on any news from the Trump administration regarding the trajectory of the war, they could see additional volatility following the release of a key monthly inflation indicator, the Consumer Price Index, Wednesday.
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