The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) surged to 6.81% in the week ending April 11, 2025, up from 6.61% the previous week, according to the Mortgage Bankers Association (MBA). This marked the sharpest weekly increase since October and pushed borrowing costs to their highest level since late February.
US mortgage rates spike, applications tumble
The jump in mortgage rates closely tracked the recent spike in Treasury yields, as escalating trade tensions between the U.S. and major global partners rattled financial markets. Investor concerns over the potential economic fallout from retaliatory tariffs prompted a sell-off in long-duration U.S. assets, pushing up bond yields and, consequently, mortgage rates.
As a result, mortgage demand took a sharp hit. Total mortgage application volume plummeted by 8.5% week-over-week—the steepest drop so far in 2025—erasing much of the 20% surge recorded in the previous week. The decline underscores how sensitive the housing market remains to volatility in interest rates and broader economic uncertainty.
Refinancing activity reacts more quickly to change rates
Refinancing activity, which typically reacts more quickly to changes in rates, dropped 12% on the week. Home purchase applications also fell by 5%, despite signs of rising housing inventory in some regions—a factor that would normally support stronger buyer activity.
“Concerns around the trade war and the resulting movement in Treasury markets significantly impacted mortgage pricing this week,” said a spokesperson for the MBA. “Borrowers may be pulling back amid rate volatility and growing uncertainty around the broader economic outlook.”
With inflationary concerns, tariff escalations, and bond market turbulence all colliding, the housing market faces renewed headwinds just as the spring buying season gains momentum.
