Mortgage Applications Drop as Interest Rates Rise

During the close of March, mortgage application activity in the U.S. experienced a significant decrease as rising interest rates impacted potential homebuyers and those seeking refinancing options. According to the Mortgage Bankers Association (MBA), the Market Composite Index, which measures overall mortgage application volume, dropped by 10.5% on a seasonally adjusted basis for the week ending March 20. The unadjusted figures showed a 10% decline over the same period.

Refinancing activity notably fell by 15% from the prior week, highlighting the impact of increased borrowing costs. The MBA reported a 5% downturn in the seasonally adjusted purchase index during this timeframe. The average contract interest rate for a standard 30-year fixed-rate mortgage with conforming loan balances rose to 6.43%, marking the highest rate since October 2025. Joel Kan, the MBA’s vice president and deputy chief economist, emphasized that this rise is over 30 basis points higher than the end of February's level.

Kan elaborated that persistently high oil prices have maintained elevated Treasury yields, leading to increased mortgage rates. This resulted in a 15% drop in refinance applications due to diminishing incentives. In addition, purchase application activity decreased as potential homebuyers grappled with higher rates and economic uncertainty.

Shifting Trends in Loan Applications

The distribution of loan applications is shifting, with the proportion of refinance activities among total mortgage applications declining to 49.6% from 52.3% the previous week. Conversely, the share of adjustable-rate mortgages (ARMs) in total applications rose to 8.1%, as consumers sought immediate payment relief through these alternatives.

Government-backed lending trends also experienced changes. The Federal Housing Administration's share of applications increased slightly to 19.7% from 19.4%, while the Department of Veterans Affairs' share fell to 15.9% from 16.7%. The U.S. Department of Agriculture observed a minor increase in its application share to 0.5%.

Interest rates across various loan categories increased, according to the MBA. The average rate for 30-year fixed-rate mortgages with jumbo loan balances climbed to 6.45%, while the rate for 15-year fixed-rate mortgages rose to 5.83%.