U.S. mortgage application activity experienced a sharp decline in late March, driven by climbing interest rates that have pushed potential homebuyers and those seeking to refinance back to the sidelines.
For the week ending March 20, the Mortgage Bankers Association (MBA) reported that its Market Composite Index — a measure of total mortgage loan application volume — decreased 10.5% on a seasonally adjusted basis from the previous week. On an unadjusted basis, the index saw a 10% weekly drop.
The overall decline was heavily influenced by a sharp pullback in refinancing, which plunged 15% from the prior week. Meanwhile, the association’s seasonally adjusted purchase index fell by 5% over the same period.
Rising borrowing costs are largely to blame for the chilled demand. The average contract interest rate for a standard 30-year fixed-rate mortgage with conforming loan balances ($832,750 or less) increased by 6.43% from 6.30% the week prior, according to MBA data.
This marks the highest level for the 30-year fixed rate since October 2025, according to Joel Kan, the MBA’s vice president and deputy chief economist. It now sits more than 30 basis points higher than it was at the end of February.
“The threat of higher for longer oil prices continued to keep Treasury yields elevated, and mortgage rates finished last week higher,” Kan explained in commentary accompanying the data.
“Given this period of increasing mortgage rates and diminishing refinance incentives, refinance applications decreased 15% as applications across all loan types declined,” he added. “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.”
As affordability wanes and rates climb, the composition of loan applications is shifting. The refinance share of total mortgage activity decreased to 49.6%, down from 52.3% the previous week. Conversely, budget-conscious borrowers increasingly looked toward adjustable-rate mortgages for immediate payment relief, driving the ARM share of activity up to 8.1% of total applications.
Looking at government-backed lending, the Federal Housing Administration share of total applications ticked up to 19.7% from 19.4%, while the Department of Veterans Affairs share decreased to 15.9% from 16.7%. The U.S. Department of Agriculture share saw a marginal increase to 0.5%.
Rates increased across all major loan categories tracked by the MBA. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances rose to 6.45%, and the average 15-year fixed-rate mortgage climbed to 5.83%.
