Refis Rise In Response To Rate Cooldown

ByTMN Editor Reading Time: 2 minutes

Mortgage applications saw a boost as rates fell on tech stock uncertainty and the FOMC’s decision to hold.

The Mortgage Bankers Association’s weekly survey shows that the adjusted Market Composite Index — a measure of mortgage loan application volume — increased by 2.2% last week, reversing the week prior’s 2% dip.

Rates fell from 7.02% to 6.97%, their lowest level in six weeks, as Treasury yields declined after January’s FOMC meeting. Saying inflation remains “somewhat elevated” with respect to its ultimate goal rate of 2%, the FOMC judged the current economic outlook to be uncertain and declined to change the target range for the federal funds rate, which will remain for now at 4.25% to 4.5%.

Rates were further impacted by the stock market turmoil following the release of DeepSeek, a powerful, open-source, and free large language model from China that knocked $1 trillion off the U.S. market.

Adjusted purchase applications slipped by 4%, while the unadjusted index was up 15% and 0.2% higher year-over-year.

“Purchase activity had a tougher week, with declines across all loan types. The average loan size for a purchase loan has increased since the start of the year and continued that trend last week with weaker government purchase activity, which reached $447,300, the highest level since October 2024,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist.

Refinances, meanwhile, had their biggest week since December, rising 12%. Their share of mortgage activity rose to 39% of total applications.

Stocks for American tech giants like Nividia have picked up some since DeepSeek’s arrival, but uncertainty remains.

Truist Advisory Services’ chief market strategist Keith Lerner suggested we may encounter more rocky terrain and urged clients not to react strongly.

“With stocks not far from all-time highs and after a strong January, it’s premature to say this current setback presents a great buying opportunity,” he wrote in a note.

Truist Advisory Services expects the economy to be “resilient” in 2025.