Mortgage rates dipped — but homebuyers stayed on the sidelines as war-driven uncertainty froze purchase demand

Purchase mortgage applications fell 1% last week on a seasonally adjusted basis, extending declines as economic uncertainty tied to the Iran war keeps homebuyers on the sidelines. The unadjusted purchase index was unchanged from the prior week and down 3% compared to the same week last year. Demand for government-backed purchase loans declined, while conventional loan demand remained flat.

The drop in activity comes even as average mortgage rates for 30-year fixed-rate loans fell to 6.42%, down from 6.51% the week before — the lowest level in a month. The decline broke a streak of five consecutive weekly drops in refinance applications, which jumped 5% and now make up 45.5% of total applications, up from 44.3% the previous week. Refinance demand is 15% higher than it was during the same week last year.

Economic volatility linked to the Iran conflict, particularly its effect on energy and commodity prices, has weighed on consumer confidence, according to Joel Kan, MBA’s deputy chief economist. That hesitation has held back purchase activity despite more favorable borrowing costs. The MBA’s Market Composite Index rose 1.8% for the week ending April 10, driven entirely by the refinance rebound. Purchase demand remains weak, revealing that lower rates alone are not enough to restart the housing market when broader financial uncertainty persists.