Mortgage refinances surged again, but rates are now suddenly jumping higher

Last week, applications to refinance a home loan rose 20% compared with the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index. Applications were 183% higher than the same week one year ago.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $832,750 or less, decreased to 6.16% from 6.18%, with points falling to 0.54 from 0.56, including the origination fee, for loans with a 20% down payment. That is the lowest rate since September 2024.

“Mortgage rates declined further last week, driving another big week for refinance applications, which saw the strongest level of activity since September 2025,” said Joel Kan, MBA’s vice president and deputy chief economist. “These lower rates prompted greater refinance activity from conventional and VA refinance borrowers, with increases of 29 percent and 26 percent, respectively. Refinance applications accounted for more than 60 percent of applications, and the average loan size also moved higher.”

Rates initially dropped the week before last, after President Donald Trump said he would make mortgage giants Fannie Mae and Freddie Mac buy $200 billion of mortgage-backed bonds. Rates only fell 9 basis points across the two weeks, but the focus on it in the news may have caused an outsized reaction. The 30-year fixed was 86 basis points lower year over year.

Applications for a mortgage to purchase a home rose 5% for the week and were 18% higher than the same week one year ago. Homebuyers are still contending with high home prices and continued uncertainty in the broader economy. There are more homes available for sale, but affordability, despite slightly lower rates, is still a major impediment.

Interest rates moved much higher to start this week, as bond markets sold off following the Trump’s threats of new tariffs and escalating tensions over Greenland. The average rate on the 30-year fixed jumped 14 basis points higher, according to a separate survey from Mortgage News Daily.

“This matches the level seen the day before the announcement of the administration’s $200 billion mortgage bond buying plans. The last time rates were higher was December 23rd,” wrote Matthew Graham, chief operating officer at Mortgage News Daily. “In light of that announcement, why aren’t mortgage rates doing better? Simply put, the market has already reacted to that news to the extent allowed by its transparency.”