Mortgage application volumes in the United States jumped by 11% in the week ending May 2nd, reversing three consecutive weekly declines and signaling a tentative return of buyer interest to the housing market.
US mortgage applications rebound
The surge in applications coincided with a second straight drop in mortgage rates, as temporary stability in broader financial markets created a window of opportunity for homebuyers and homeowners alike. The Mortgage Bankers Association reported that purchase applications rose 11% from the previous week, suggesting that some prospective buyers are reentering the market, possibly in anticipation of a seasonal uptick in activity during the late spring and early summer months.
Refinancing activity also rebounded, with applications up 11% week-over-week, reflecting how sensitive the refinancing segment remains to small shifts in borrowing costs. Notably, applications for Veterans Affairs (VA) loans surged 26%, indicating that lower rates may be particularly attractive to borrowers with access to government-backed mortgage programs, which often feature more favorable terms.
Mortgage rates fall for second week
Meanwhile, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) declined to 6.84% from 6.89% in the previous week. Although still elevated by historical standards, the rate has now fallen for two consecutive weeks and remains below the 7.18% level recorded one year earlier. The decline in rates comes as bond yields have edged lower amid mixed economic data and persistent geopolitical tensions, especially surrounding trade policy and potential Fed action.
Despite the modest drop in rates, affordability challenges remain a significant headwind for many buyers. Elevated home prices, limited inventory, and higher insurance and property tax costs continue to weigh on sentiment. However, the recent easing in mortgage rates could help reduce some of the financial strain, particularly for first-time buyers or those seeking to lock in lower payments after a volatile first quarter.
Looking ahead, market participants will be closely watching upcoming inflation data and the Federal Reserve’s tone in its next statement, as any indication of prolonged rate stability or cuts later in the year could further fuel housing market momentum. While this week’s data marks a positive turn, analysts caution that sustained improvement will likely require a combination of lower borrowing costs, improved inventory levels, and greater economic certainty.
