Mortgage demand fell 6% last week, dropping to its lowest level since February 2025 as mortgage rates climbed to their highest level in nearly three years.
Why it matters: Mortgage rates jumped 18 basis points in just one week to 7.3%, the highest level since November 2023. That sharp increase is quickly translating into weaker demand from both homebuyers and existing homeowners.
Refinancing took the biggest hit. Refinance applications plunged 8.7% from the previous week and are now at their lowest level since January 2025. That’s not surprising: as rates move higher, fewer homeowners have an existing mortgage that makes financial sense to refinance.
- Homebuyers are pulling back, too. Purchase applications fell 4.3% for the week and dropped to their lowest level in 17 months, another sign that affordability is becoming an even bigger obstacle for the housing market.
The big picture: Higher home prices were already stretching buyers’ budgets. Now, the renewed surge in mortgage rates is increasing monthly payments and reducing purchasing power at a time when housing demand was already struggling.
The bottom line: The bond market’s recent selloff is quickly spilling into housing. With mortgage rates at 7.3%, purchase demand is at a 17-month low and overall mortgage activity is at its weakest since February 2025. Until rates begin moving lower, affordability is likely to remain a major headwind for the housing market.