Mortgage rates increased for the fifth week in a row, another eight basis points, according to the Freddie Mac Primary Mortgage Market Survey released on April 2nd. However, they are still 18 basis points lower than the same period last year and are still much lower than the 6.75 – 7.00% range that rates that were in during the first half of 2025. As continued tensions in the Middle East drive up treasury yields, mortgage rates follow. This upward trend comes as the mortgage market is making sense of conflicting dynamics. Economic growth slowed more than expected in the fourth quarter, but inflation is on the rise, driven in large part by rising oil prices. And the war in Iran has put further pressure on inflation, just as the crucial spring homebuying season kicks off.
Mortgage applications decreased 10.4 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending March 27th. “The 30-year mortgage rate reached its highest level since last August and is up half a percentage point from just one month ago. Refinance application volumes declined sharply again last week” said Mike Fratantoni, MBA’s SVP and Chief Economist. “Seasonally adjusted purchase application volume also declined over the week. The headwinds of higher rates are being offset somewhat by the buyer’s market in many parts of the country as there are more homes for sale than buyers have seen in some time. Moreover, purchase applications for FHA and VA loans continue to hold up better than those for conventional buyers. However, the shocks of the jump in rates and the increase in overall economic uncertainty are likely to have an impact on buyer confidence”.
U.S. consumer sentiment fell more than expected in March, touching a three-month low, as the war in the Middle East stoked inflation worries and cast a shadow over the economic outlook. The decline, reported by the University of Michigan’s Surveys of Consumers last Friday, occurred across political party affiliation and age groups, with large decreases among middle- and higher-income consumers as well as those owning stocks. “These patterns suggest that, at this time, consumers may not expect recent negative developments to persist far into the future,” said Joanne Hsu, the director of the University of Michigan’s Surveys of Consumers. “These views are subject to change, however, if the Iran conflict becomes protracted or if higher energy prices pass through to overall inflation.”
U.S. claims for unemployment benefits fell from the previous week, coming in below expectations in a bullish sign for an otherwise cooling labor market. Initial jobless claims fell by 9,000 to 202,000 for the week ending March 28th, the Labor Department reported Thursday. Continuing claims, which track the unemployed population still seeking work, rose to 1.84 million for the week ending March 21 from a revised level of 1.82 million the week before. The data “suggests the labor market is no longer deteriorating sharply, but it’s far from robust,” Natixis CIB economist Christopher Hodge wrote in emailed commentary. Recent volatility from poor weather and major strikes has also skewed first quarter data, Hodge said. The signals from the labor market could keep the Fed in its wait-and-see approach, as negative impacts on growth from the Iran war counterbalance concerns about energy-driven inflation spikes.
