US Home Purchase Demand Holds Firm Despite Rising Mortgage Rates

US mortgage application volume saw a modest decline last week, driven primarily by a drop in refinancing activity as interest rates climbed. According to the Mortgage Bankers Association (MBA), total application volume fell 1.6% on a seasonally adjusted basis. The trend highlights a divergence between refinance demand, which is highly sensitive to rate fluctuations, and purchase demand, which is currently supported by improved inventory levels and a seasonal spring uptick. The average contract interest rate for a 30-year fixed-rate mortgage with conforming loan balances of $832,750 or less rose to 6.37%, up from 6.35% the previous week. Consequently, refinance demand dropped 4% weekly, although it remains 51% higher than the same period last year. In contrast, applications for home purchase mortgages increased by 1% for the week and are up 21% year-over-year. MBA Chief Economist Mike Fratantoni noted that buyers are moving forward despite geopolitical uncertainties surrounding Iran, aided by more favorable inventory conditions across most regions. Market participants are now shifting focus toward the Federal Reserve. Investors are awaiting commentary from Chairman Jerome Powell, whose upcoming press conference is expected to provide critical signals on the future trajectory of interest rates, potentially influencing mortgage costs in the coming weeks.