One economist said the economic uncertainty is likely to make “consumers more cautious when making big financial decisions.”
Rising mortgage rates are hitting the spring housing market hard, new figures suggest, but at least one expert sees signs that some homebuyers are “ignoring” the economic uncertainty.
Mortgage applications rose just 1.7% last week from the previous week, according to statistics from the Mortgage Bankers Association. “Mortgage rates rose across the board last week, with the 30-year fixed rate at 6.46%, the highest level in five weeks,” Joel Kang, MBA vice provost and deputy chief economist, said in a statement.
Joel Kang
Although the week-over-week improvement was modest, loan applications were up 7% last week compared to the same period last year. Prime Minister Kang said the year-on-year increase was due to “potential home buyers returning to the market after shaking off the current economic and mortgage rate uncertainties.”
MBA figures also show that refinances as a share of total mortgage activity fell to 40.8% last week, down from 42% a week earlier.
While the MBA numbers contain some positive signs for real estate professionals, a world of interest rates in the mid-6% range is far from what most observers were expecting when the spring buying season began. In fact, after years of rising interest rates, many agents and brokers were specifically eyeing 2026 as when the market would finally thaw.
Rather, geopolitical conflicts such as the Iran war are constraining global supply chains and pushing up interest rates.
Against this backdrop, the Federal Reserve left interest rates on hold again in late April. And this week, the U.S. Bureau of Labor Statistics reported that the Consumer Price Index (CPI), a measure of inflation, rose 3.8% in April. This was the “highest inflation rate in nearly three years,” Lisa Sturtevant, chief economist at Bright MLS, said in a statement.
Lisa Sturtevant
All of these factors, including inflation, mortgage rates, and loan applications, taken together suggest that the spring market may not be hot right away.
“Rising inflation will make more consumers cautious about important financial decisions,” Sturtevant said in a statement. “With prices rising again last month and the Middle East conflict showing no signs of resolution, home sales are likely to remain depressed for the remainder of this spring and into the summer.”
Email Jim Dalrymple II
