U.S. Mortgage Applications Drop 8.5% as 30-Year Rates Rise to 6.81%, Prompting Shift to ARMs

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Published Apr 16, 2025, 12:54 PM

Mortgage applications in the U.S. experienced a significant decline last week, dropping by 8.5% compared to the previous week, according to data from the Mortgage Bankers Association (MBA). This marks the largest weekly decline since December. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances increased to 6.81% from 6.61% last week, reflecting broader market volatility. This rise in rates has led to a notable shift among homebuyers towards adjustable-rate mortgages (ARMs), with the ARM share reaching 9.6% and initial fixed rates closer to 6%. The surge in interest rates has been attributed to tariff turmoil, prompting homebuyers to seek refuge in riskier loan options. Applications to purchase a home fell by 5% for the week, with the Purchase Index at 164.2, while refinancing applications saw a 12% decrease, with the Refinance Index at 841.9. The Market Index stood at 267.5.

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