Mortgage Demand Explodes As Tariff Confusion Temporarily Pushes Rates Down

ByTMN Editor Reading Time: 2 minutes

Mortgage demand turned around last week, reversing a slew of declines with an explosion of activity as consumers rushed to capitalize on economic confusion.

The Mortgage Bankers Association’s weekly survey shows that the adjusted Market Composite Index — a measure of mortgage loan application volume — rose by 20%, blowing away the week prior’s 1.6% drop.

Applications are now at their highest level since September 2024.

Rallying from staggering lows, purchase demand is inching up. Adjusted purchase applications rose 9% while the unadjusted index increased 10% and was 24% higher year-over-year. 

MBA Vice President and Deputy Chief Economist Joel Kan attributes the flurry of activity to the economic uncertainty brought on by Donald Trump’s tariff confusion.

Rates dropped to 6.61%, their lowest since last October, as markets scrambled to respond to the news.

“Both homebuyers and refinance borrowers were quick to take advantage of this dip in rates, driving the purchase index 24% higher than a year ago to the strongest pace since January 2024. Refinance applications rose by 35% to the highest level in six months, as borrowers with larger loan sizes tend to be more sensitive to rate changes. The average refinance loan size jumped to its second highest in the survey at $399,600,” Kan said.

But analysts expect the dip to be temporary. Rates are overwhelmingly expected to increase moving forward.

Rates have already jumped back up to 6.85% this week, to be reflected in the next round of MBA data.

“While no one can be sure exactly how things will pan out in the long run, the market is currently expressing extreme disapproval of the new tariff plans.  While interest rates had previously benefited from some of the chaos in the stock market, that ship has sailed. Now, both sides of the market are losing ground (stocks lower, rates higher),” Matthew Graham of Mortgage News Daily wrote.

Kevin Hassett, director of the White House National Economic Council, acknowledged that the tariffs will result in stronger inflation. “There might be some increase in prices,” he told ABC, nodding specifically to grocery costs.

Treasury Secretary Scott Bessent told NBC to expect an “adjustment process.”

The latest tariffs, including a 104% levy on Chinese imports, went into effect this week.