U.S. mortgage application volumes dropped sharply in mid-March, falling nearly 11% as a sudden spike in interest rates chilled refinancing activity, according to the latest data from the Mortgage Bankers Association (MBA).
Mortgage applications decreased 10.9% on a seasonally adjusted basis for the week ending March 13, the MBA reported Wednesday. On an unadjusted basis, mortgage demand declined 10% on the week.
The significant pullback in application volumes was triggered by rising borrowing costs across the board. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($832,750 or less) jumped to 6.3% from 6.19% the previous week, according to MBA data.
This marks the highest rate observed since December 2025. Similarly, the average rate for 30-year fixed-rate jumbo loans increased from 6.26% to 6.39%.
Joel Kan, MBA’s vice president and deputy chief economist, attributed the rate jump to broader macroeconomic and geopolitical factors.
“Mortgage rates continued to move higher, driven by increasing Treasury yields as the conflict in the Middle East kept oil prices elevated, along with the risk of a broader inflationary shock,” Kan stated in commentary accompanying the data.
The MBA’s refinance index dropped 19% from the previous week, though it remains 69% higher than the same week one year ago. Conventional refinance applications were hit particularly hard, plummeting 27% over the week.
Government-backed refinances also saw a decline, albeit a more modest 5% drop, which Kan attributed to Federal Housing Administration (FHA) rates increasing less rapidly compared to conventional rates. Consequently, the refinance share of total mortgage activity shrank to 52.3%, down from 57.8% the week prior.
Despite the volatile rate environment, the market for home purchases nudged upward, with the seasonally adjusted purchase index rising 1% from one week earlier. On an unadjusted basis, refinances saw a 2% week-over-week gain and a 12% increase from the same week last year.
“Purchase applications remained steady despite the higher rates, with conventional purchase applications unchanged and growth in both FHA and [Veterans Affairs] segments,” Kan said. He added that overall purchase applications continue to outpace last year’s levels, supported by improving housing inventory and a slowdown in home-price growth across multiple markets.
