Refinance demand slid heading into spring
Mortgage refinance demand hit a wall in mid‑March as mortgage rates jumped back to their highest level since late 2025, pulling overall US application volume lower even while purchase activity crept higher into the spring market.
Data from the Mortgage Bankers Association (MBA) Weekly Mortgage Applications Survey for the week ending March 13, 2026 showed total applications down 10.9% on a seasonally adjusted basis from the previous week.
The refinance index was down about 19% week over week but still nearly 70% above its year‑earlier level.
Purchase applications edged up roughly 1% and stood about 12% higher than the same week in 2025.
“Mortgage rates continued to move higher, driven by increasing Treasury yields as the conflict in the Middle East kept oil prices elevated, along with the risk of a broader inflationary shock. Mortgage rates increased across the board, with the 30‑year fixed rate rising to 6.30 percent, the highest rate since December 2025,” said Joel Kan, MBA vice president and deputy chief economist.
“Rates were around 20 basis points higher than they were two weeks ago and this caused a reversal in refinance activity, particularly for conventional refinance applications, which decreased 27 percent over the week. Government refinances also declined but by 5 percent, as FHA rates have not increased quite as rapidly.”
Refinance share narrows as rates spike
The refinance share of activity fell to 52.3% of total applications from 57.8% the prior week, while adjustable‑rate mortgages accounted for 8% of volume.
Kan said purchase demand proved more stable: “Purchase applications remained steady despite the higher rates, with conventional purchase applications unchanged and growth in both FHA and VA segments. Overall purchase applications remained ahead of last year’s pace, supported by higher inventory and slowing home‑price growth in many markets.”
This week’s reversal followed an early‑March pickup in activity, when MBA reported a 3.2% rise in applications and stronger purchase demand as buyers moved ahead of potential rate swings in the run‑up to the spring selling season.
The MBA survey, which has been conducted weekly since 1990 and covers more than three‑quarters of US retail residential mortgage applications, remains a key early read on shifts in borrower behavior as the industry exits the ultra‑low‑rate era.
The latest data show lenders how quickly refinance pipelines could dry up when the 30‑year rate moves even a bit higher. Even small rate increases make refi borrowers step back.
Purchase activity, however, depends more on better inventory and easing prices. Buyers watch overall affordability rather than week‑to‑week rate moves.
As spring progresses, the key question for the market is whether rates would steady long enough for that growing purchase demand to make up for the renewed hit to refinancing.
Broader inflation backdrop clouds rate outlook
Recent wholesale inflation data adds another layer of uncertainty. The producer price index, a key gauge of pipeline costs, rose 0.7% in February, more than double consensus forecasts and the fastest monthly gain since early 2025.
On a 12‑month basis, headline PPI was up 3.4% and core PPI 3.9%, pointing to persistent pressure in services costs and in categories such as food and energy.
Markets read the report as a sign that underlying inflation remains sticky even before the latest surge in oil, pushing Treasury yields higher and weighing on rate‑sensitive sectors.
The inflation surprise also fed directly into expectations for the Federal Reserve’s next moves. Ahead of its policy announcement later Wednesday, the Fed is widely expected to hold its benchmark rate in the 3.5%–3.75% range, where it stayed since the December 2025 cut.
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