Homes in Palm Beach Gardens, Florida, USA, on Sunday, January 11, 2026.
Zak Bennett | Bloomberg | Getty Images
Mortgage demand increased significantly last week as consumers returned from the holidays to find lower interest rates overall and a sharp drop in rates on Friday due to news from the White House.
President Donald Trump posted on social media late Thursday that he would order mortgage giants Fannie Mae and Freddie Mac to buy $200 billion in mortgage-backed bonds in an effort to lower mortgage rates. According to Mortgage News Daily, the average 30-year bond interest rate briefly dipped below 6% on Friday morning on the news before rising slightly again.
According to the Mortgage Bankers Association’s seasonally adjusted index, total mortgage application volume increased 28.5% last week compared to the previous week, which was adjusted for the holiday.
According to the MBA survey, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $832,750 or less fell from 6.25% to 6.18% for the full week, with points for loans with a 20% down payment falling from 0.57 to 0.56, including the origination fee.
“Right before that, rates started to fall a bit, and some of that could be due to a rebound from the holidays, even though we took the holidays into account in the results the week before. It’s always a noisy time,” said Joel Kan, an MBA economist, adding, “That was a real move based on the rate drop. Spreads had already been converging before the announcement.”
Refinance demand, which is most sensitive to daily interest rate changes, rose 40% this week and was 128% higher than the same week a year ago.
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“The average loan amount for refinance applications was also higher because borrowers with larger loan amounts tend to be more sensitive to interest rate changes,” Kan added.
Applications for a mortgage to buy a home, which are less sensitive to sudden interest rate changes, rose 16% this week and were 13% higher than the same week a year ago. The increase there was more likely due to people returning from vacation, lower real estate prices and more inventory for sale.
According to Mortgage News Daily, mortgage rates rose earlier this week. They rebounded on Monday in anticipation of higher oil prices and then rose slightly on Tuesday.
“Without a reasonably well-received CPI (consumer price index) report, today might have been even worse,” Matthew Graham, COO of Mortgage News Daily, wrote on Tuesday. “This key data showed that inflation remained under control in December, with the most closely watched metrics coming in just below the median forecast.”