Higher rates causes a double-digit drop
Mortgage rates ticked upward last week for the first time in more than two months, dampening refinance activity while nudging purchase applications to their highest level in six weeks, according to the latest data from the Mortgage Bankers Association (MBA).
MBA’s Market Composite Index, which tracks overall mortgage application volume, fell 6.2% on a seasonally adjusted basis for the week ending March 14, 2025. On an unadjusted basis, the index declined 6% from the previous week.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) rose to 6.72% from 6.67% the previous week.
The increase in rates led to a 13% drop in refinance applications, though refi activity remains 70% higher than the same period last year. Refinance application dollar volume, measured by Fannie Mae’s Refinance Application-Level Index (RALI), declined 12.2% week over week but remains 67.2% higher than the same week in 2024.
“Mortgage rates increased for the first time in nine weeks, with the 30-year fixed rate rising to 6.72%,” said MBA chief economist Mike Fratantoni. “This increase in rates led to a decrease in refinance volume. However, purchase application volume inched up to its highest level in six weeks.”
Meanwhile, purchase applications inched up 0.1% seasonally adjusted, with FHA-backed purchase applications rising 3% week over week.
“Overall, purchase application volume is up 6% compared to last year at this time. Growing inventories of homes on the market and steadier mortgage rates are supporting homebuying activity thus far this spring,” Fratantoni said.
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Refinance share of total mortgage applications fell to 42.0% from 45.6% the prior week. Adjustable-rate mortgages (ARMs) accounted for 6.7% of total applications, down from the previous week.
Meanwhile, FHA loan share increased to 16.5% from 16.1%. VA loan share decreased to 14.6%, down from 15.9%. USDA loan share remained unchanged at 0.4%.
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