LIVE MARKETS-Mortgage demand wilts as rates approach one-year high

Fixes typo in headlines

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MORTGAGE DEMAND WILTS AS RATES APPROACH ONE-YEAR HIGH

Wednesday is a relatively quite day, economically speaking; the only data to speak of arrived courtesy of the Mortgage Bankers Association's weekly home loan data.

The skinny: financing home loans grew more expensive last week which was not a welcome development among potential borrowers.

The average 30-year fixed contract rate USMG=ECI increased by 4 basis points to 6.69%, the highest it's been since last August.

Demand for loans to purchase homes USMGPI=ECI—considered a housing market coal mine canary—dropped by 3.6%. Refi applications USMGR=ECI—which accounted for a decreasing 39.5% share of the mortgage pie—tanked 9.9%.

Combined, home loan demand slid by 6.4% last week.

"Following last week’s spike in oil prices, mortgage rates moved higher, with the 30-year fixed rate increasing to 6.76 percent, the highest rate since August 2025,” writes Joel Kan, MBA’s deputy chief economist. "Despite housing inventory increasing in certain markets, higher rates have added to ongoing affordability challenges for many homebuyers, which drove the decrease in purchase activity over the week."

The 30-year fixed rate has been 6% since September 2022, and has been blamed by homebuilders and realtors for the affordability crisis weighing on the sector.

The rate currently sits just 7 basis points below where it was during the same week a year ago.

Over that same period, purchase applications have increased by 2.7%, while and refi demand is now down 2.2% in the last 12 months.

MBA's mortgage demand data, while fairly fresh, is still last week's news.

Housing stocks, on the other hand, reflect where investors expect the sector to be six months to a year in the future.

With that in mind, investors' view of the sector is starting to improve.

Both the S&P 1500 Homebuilding Index .SPCOMHOME and the PHLX Housing Sector Index .HGX handily outperformed the broader market in the first two months of the year, but that advantage evaporated in March when the U.S.-Israeli war on Iran pushed interest rates higher, taking mortgage rates with them.

While the indexes have largely underperformed the broader market since then, over the last week they look to be playing catch-up.

So far this year, the SPCOMHOME and the HGX are now up 2.8% and 5.8%, respectively, compared with the S&P 500's .SPX 8.5% year-to-date advance.

(Stephen Culp)

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