A for sale sign is displayed near a home on April 24, 2025 in Austin, Texas.
Brandon Bell | Getty Images
Mortgage interest rates dropped for the second straight week, although not by a lot. That was thanks to more negative news on the economy. But despite all that, weekly mortgage demand surged higher by 11%, 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, $806,500 or less, decreased to 6.84% from 6.89%, with points increasing to 0.68 from 0.67, including the origination fee, for loans with a 20% down payment. That rate was 34 basis points higher the same week one year ago.
“The economic news last week included a negative reading for first-quarter GDP growth and further signs of contraction in the manufacturing sector, mixed with a solid employment report for April. The net impact on mortgage rates was mostly downward but just back to levels from early April,” said Michael Fratantoni, senior vice president and chief economist at the MBA, in a release.
Applications for a mortgage to purchase a home rose 11% for the week and were 13% higher than the same week one year ago. Driving the increase was a surge in demand for conventional loans, which Fratantoni called “a surprisingly strong move given lingering economic uncertainty.”
“Borrowers of conventional loans tend to have larger loan sizes and more apt to be move-up buyers,” he said.
The April housing market was decidedly slow, as some potential buyers say they are afraid to make a major financial move, given the potential impact from tariffs. Some are still smarting from the roller-coaster ride on the stock market early in the month. Real estate agents still report strong demand, but fewer borrowers willing to sign a deal.
Applications to refinance a home loan also rose 11% for the week and were 51% higher than the same week one year ago. That demand was driven by Veterans Affairs, or VA, loans , which rose 26% for the week.
Mortgage rates haven’t moved much to start this week, but that could change swiftly with Wednesday’s meeting of the Federal Reserve. The Federal Open Market Committee, or FOMC, is not expected to cut interest rates, but any unexpected commentary from Fed Chair Jerome Powell could move markets and, consequently, mortgage rates more decisively.