Mortgage Demand Surges Amid Recent Rate Drops

Recent volatility in financial markets has caused a significant drop in mortgage interest rates, leading to a surge in mortgage demand. According to the Mortgage Bankers Association, total mortgage application volume jumped 20% last week, reaching its highest level since September 2024. The average interest rate for 30-year fixed-rate mortgages decreased to 6.61%. This spike in demand was largely driven by homeowners looking to refinance, with refinance applications up 35% from the previous week and 93% higher than a year ago.

Additionally, while the weekly decline in rates was minor, it marked the lowest rate since last October, prompting many homeowners to act quickly. The rise in demand included a notable increase in the average refinance loan size to $399,600, indicating that larger loans are becoming more favorable for refinancing. Mortgage applications for new home purchases also saw a 9% increase, with buyers facing higher prices despite more available listings.

However, the increase in mortgage demand may be temporary as interest rates began to rise again at the start of the week. Experts suggest that upcoming inflation data could significantly influence rate movements in the near future, highlighting the unpredictable nature of the current mortgage market.