Homes in Palm Beach Gardens, Florida, US, on Sunday, Jan. 11, 2026.
Zak Bennett | Bloomberg | Getty Images
Mortgage demand spiked markedly higher last week as consumers returned from the holidays to find overall lower interest rates and then a sharp rate drop Friday on news from the White House.
President Donald Trump posted on social media late Thursday that, in an effort to lower mortgage rates, he would order mortgage giants Fannie Mae and Freddie Mac to buy $200 billion in mortgage-backed bonds. Just on that news, the average rate on the 30-year fixed sunk briefly below 6% Friday morning before bouncing slightly higher again, according to Mortgage News Daily.
As a result, total mortgage application volume jumped 28.5% last week from the previous week, which was adjusted for the holiday, according to the Mortgage Bankers Association’s (MBA) seasonally adjusted index.
For the whole week, on the MBA’s survey, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $832,750 or less, decreased to 6.18% from 6.25%, with points decreasing to 0.56 from 0.57, including the origination fee, for loans with a 20% down payment.
“Rates started to come down a little just before that, and part of it might be a bounce back from the holidays, even though we did adjust for the holiday in the results the week before. It’s always a noisy time,” said Joel Kan, an MBA economist, adding, “This was a real move based upon the rate drop. Spreads had been moving in even before the announcement.”
Refinance demand, which is most sensitive to daily rate changes, surged 40% higher for the week and was 128% higher than the same week one year ago.
“The average loan size for refinance applications was also higher, as borrowers with larger loan sizes are typically more sensitive to changes in rates,” Kan added.
Applications for a mortgage to purchase a home, which are less sensitive to sudden rate changes, increased 16% for the week and were 13% higher than the same week one year ago. The increase there was probably driven more just by people returning from the holidays, easing home prices and more inventory available for sale.
Mortgage rates moved higher to start this week, according to Mortgage News Daily. They bounced Monday on the expectation of higher oil prices and then a little higher Tuesday.
“Things might have ended up worse today had it not been for a reasonably well-received CPI report (Consumer Price Index),” wrote Matthew Graham, COO of Mortgage News Daily on Tuesday. “This important data showed inflation remaining in check in December, with the most closely-watched metrics coming in just below the median forecast.”