Mortgage rates increased another sixteen basis points last week according to the Freddie Mac Primary Mortgage Market Survey released on March 26th. This is a 40-basis point increase since recent lows in late February. Despite this, the housing market continues to show gradual improvements compared to a year ago amid recent rate volatility. Purchase and refinance applications are up year-over-year, and rates remain lower than last year when they averaged 6.65%.
Mortgage applications decreased 10.5 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 20th. “The threat of higher-for-longer oil prices continued to keep Treasury yields elevated, and mortgage rates finished last week higher. The 30-year fixed rate is more than 30 basis points higher than at the end of February and at its highest level since October 2025,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “Given this period of increasing mortgage rates and diminishing refinance incentives, refinance applications decreased 15 percent as applications across all loan types declined. Purchase applications were also down last week, as higher mortgage rates, coupled with affordability constraints and economic uncertainty, pushed some potential homebuyers to the sidelines.”
New applications for U.S. unemployment benefits rose slightly last week, suggesting the labor market remains stable and likely giving the Federal Reserve scope to hold interest rates steady while monitoring inflation risks from the conflict in the Middle East. The report from the Labor Department on Thursday also showed the number of people collecting unemployment checks in mid-March was the lowest in nearly two years. Part of the decline, however, was probably due to people exhausting their eligibility for aid, which is limited to 26 weeks in most states. The job market remains in what economists describe as a “low-hire, low-fire” state. Despite the relative calm, economists expected the labor market would take a hit from the U.S.-Israeli war with Iran, which has sent oil prices surging. “It takes time for companies to recognize what a shock like this means for the economy, and then to have the conviction needed to start shedding workers,” said Carl Weinberg, chief economist at High Frequency Economics.
The Federal Reserve will keep U.S. interest rates on hold until September, according to economists in a Reuters poll who are still clinging to expectations for at least one reduction later this year, despite worries about inflation from war in the Middle East. Financial markets have priced out any chance of a cut this year and added nearly a 30% chance of a hike as the U.S.-Israel war with Iran, now in its fourth week, has pushed up crude oil prices more than 40%. Nearly three-quarters of economists, 61 of 82, in the March 20-25 Reuters poll predicted the Fed would leave rates unchanged next quarter, compared to around two-thirds expecting a cut to 3.25%-3.50% range by end-June just two weeks ago. “It’s going to take longer for the Fed to gain confidence inflation is returning to a trajectory that’s consistent with its 2% target. We don’t think that’s going to happen until September,” said Jonathan Millar, senior U.S. economist at Barclays. “It’s entirely plausible the Fed waits out the oil price for longer and delays cuts into next year.”
