Weekly mortgage demand increased even as interest rates experienced significant volatility. Global tensions and economic uncertainty pushed financial markets up and down, which affected borrowing costs for homebuyers and homeowners. Despite these fluctuations, the latest data suggests that demand from buyers is strengthening as the spring housing market begins.

According to the Mortgage Bankers Association (MBA), total mortgage application volume rose 3.2% during the week, based on its seasonally adjusted index. However, the data also showed a divide between different types of borrowers, as refinancing activity slowed while purchase applications moved higher.

Interest Rates Move Higher

The average contract rate for 30-year fixed mortgages increased slightly during the week. Loans with conforming balances of $832,750 or less saw rates rise to 6.19%, up from 6.09% the week before.

Borrowers also paid slightly higher points, which increased to 0.58 from 0.52, including origination fees for loans with a typical 20% down payment. These incremental increases reflect the broader volatility in financial markets during the period.

Market instability played a major role in driving these movements. Ongoing geopolitical tensions in the Middle East caused bond markets to fluctuate, which directly influences mortgage rates.

Market Volatility Influences Borrowers

Economists say that shifting market conditions are making borrowing decisions more complicated. Mike Fratantoni, chief economist at the Mortgage Bankers Association, noted that financial markets were particularly unstable during the week.

Just weeks earlier, some borrowers were able to secure 30-year mortgage rates below 6%. However, recent volatility has pushed longer-term borrowing costs higher again.

These rapid changes can influence consumer behavior. Some borrowers move quickly to lock in rates before they rise further, while others delay applications while waiting for conditions to stabilize.

Refinancing Activity Slows

Refinancing demand showed only a modest increase during the week. Applications to refinance existing home loans rose just 0.5% compared with the previous week.

Even with the slow weekly growth, refinancing remains significantly higher than last year. MBA data shows refinance applications were 81% above levels recorded during the same week one year earlier.

This increase reflects the fact that many homeowners still hold mortgages with higher rates taken during previous market cycles. When rates dip even slightly, some borrowers see an opportunity to reduce their monthly payments.

Buyer Demand Picks Up

While refinancing slowed, purchase applications showed stronger momentum. The MBA’s seasonally adjusted purchase index climbed 7.8% during the week.

Compared with the same week a year ago, purchase demand was up 11%. This rise suggests that many buyers are returning to the market as seasonal activity increases.

Warmer weather and improved housing inventory are helping support this trend. As winter conditions ease across many parts of the United States, more buyers are beginning to actively search for homes.

Inventory Still Below Normal

Although more homes are becoming available, supply remains limited compared with historical levels. Data from the National Association of Realtors indicates that the housing market still faces a shortage of available properties.

The latest report on completed home sales showed about a 3.8-month supply of homes for sale. In housing market terms, a balanced market typically requires around six months of inventory.

Limited supply continues to support home prices, even as demand fluctuates. For many buyers, high property values remain one of the biggest barriers to entering the market.

Buyers Turn to FHA and Adjustable Loans

To cope with rising prices, some buyers are turning to loans that require smaller down payments. Applications for FHA-backed mortgages increased by more than 11% during the week, reflecting stronger demand among first-time buyers.

Another noticeable trend involves adjustable-rate mortgages. These loans typically offer lower initial interest rates compared with fixed mortgages, although they carry greater long-term risk if rates increase later.

The share of adjustable-rate mortgage applications rose to nearly 9% of total mortgage activity. This shift suggests that some borrowers are willing to accept higher risk in exchange for lower initial borrowing costs.

Rates Could Remain Volatile

Mortgage rates moved slightly lower at the start of the current week, according to data from Mortgage News Daily. However, analysts expect continued fluctuations as financial markets respond to economic and geopolitical developments.

One key factor will be the upcoming release of the Consumer Price Index, a major inflation indicator. Inflation data often influences bond markets, which in turn affects mortgage interest rates.

If inflation remains elevated, borrowing costs could increase again. As a result, mortgage demand may continue to shift as borrowers react to changing financial conditions.