A mortgage market “defined by rate-driven constraints and unresolved geopolitical uncertainty” represented as much in monthly mortgage rate-lock data for April published by Mortgage Capital Trading (MCT) on Thursday.
Purchase lock volumes eked out a gain of 1% over the month in April, maintaining annual momentum by a 0.53% margin, despite macroeconomic adversity. Purchase lock activity had expanded by 20% over the year in March, according to Optimal Blue figures.
But hedging and advisory firm MCT said Thursday that total lock volumes fell 12.57% over the month to land just 2% higher from year-ago levels in April as Iran war-fueled uncertainties and rate pressures dictate market developments, ultimately putting mortgage demand under pressure.
Despite average mortgage rates being around 0.5% lower than year-ago levels in April, “there’s been a drop-off in overall production,” explained Andrew Rhodes, senior director of capital markets at MCT, in the report.
“The war is the biggest component of what’s moving the market right now,” said Rhodes. Experts tell Scotsman Guide they project a higher floor for mortgage rates through the remainder of 2026 on account of rate volatilities.
Mortgage rates that spiraled to between 6.35% and 6.45% last week have iced out refinance candidates. Weekly mortgage application data collected by the Mortgage Bankers Association show refinance volumes dropping to multimonth lows in the first week of April before descending to their lowest levels since August by the end of the month.
As a result, rate-and-term refinance lock volumes crashed 58.5% over the month in April and cash-out refinance volumes declined 17.2%. But rate-and-term and cash-out refinances remained about 13% and 5.6% higher from a year ago, respectively.
“There’s still considerable volatility surrounding the [Middle East] situation,” Rhodes noted, “and until that stabilizes, the other data points remain secondary.”
One of those “secondary” data points — Friday’s highly anticipated April jobs report from the Bureau of Labor Statistics — showed a firming but still fragile labor market, with no change in the 4.3% unemployment rate. That outcome, combined with heightened inflation readings, is likely to secure Federal Reserve officials’ current preference to keep interest rates unchanged.
“Home affordability is going to continue to be an issue,” Rhodes concluded. “Certain markets are just pricing out individuals, and there’s no real way to get them back into the market without improved labor markets.”
