For the first time in over a month, U.S. mortgage applications have risen, breaking a five-week losing streak with a 1.8% increase in the week ending April 10, 2026. But while the uptick in total applications might sound like a sign of renewed optimism, a closer look at the numbers reveals a housing market split between those refinancing their current homes and those still hesitant to buy.
According to the Mortgage Bankers Association (MBA), the jump was largely fueled by a surge in refinancing activity. Applications to refinance existing mortgages climbed approximately 5–5.1% during the week, making them 15% higher than at the same point last year (as reported by CNBC and Sharecast). The share of total mortgage activity tied to refinancing rose to 45.5%, up from 44.3% the previous week, showing that current homeowners were quick to seize the opportunity presented by slightly lower rates.
In stark contrast, applications to purchase homes dipped by 1% over the same period, and purchase demand is now 3% lower than it was a year ago. This marks the second consecutive week that home purchase activity has lagged behind last year’s levels, according to data from The Economic Times and the MBA. The spring selling season, typically a time of heightened activity in the housing market, has thus gotten off to a rocky start. Existing-home sales in March fell by 3.6%, dropping to an annual rate of 3.98 million, and the National Association of Realtors (NAR) has cut its 2026 existing-home sales growth outlook to just 4%, a sharp decline from the previous expectation of 14%.
So, what’s behind this divergence? The answer, it seems, lies in a potent mix of economic uncertainty and global instability. Joel Kan, vice president and deputy chief economist at the MBA, pointed directly to the ongoing tensions in the Middle East—particularly the Iran conflict—as a major influence on both energy prices and mortgage rates. "Given the evolving situation in the Middle East and its impact on energy and commodity prices, mortgage rates declined last week," Kan explained, as cited by Sharecast and the MBA’s own release. He added, "Purchase activity remained subdued as potential homebuyers remained hesitant given the current economic uncertainty, which kept purchase applications below last year's level for the second consecutive week."
The numbers back up Kan’s assessment. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances (up to $832,750) fell to 6.42% from 6.51%, according to the MBA. This is the lowest level seen in about a month. Freddie Mac’s figures were similar, putting the average 30-year rate at 6.37% for the week ending April 9. Fortune, citing Optimal Blue’s lock data, reported Wednesday’s average 30-year fixed conforming mortgage at 6.279%, with 15-year rates at 5.689%. Refinance rates hovered in the low-6% range, with Zillow data showing a 30-year refinance rate of 6.33% and Yahoo Finance listing the purchase rate at 6.16%.
But even with these lower rates, buyers aren’t exactly rushing in. Experts suggest that the uncertainty surrounding the economy—exacerbated by global tensions and their impact on oil and energy prices—is making would-be homebuyers cautious. Matthew Graham, chief operating officer at Mortgage News Daily, summed up the situation: "As for the drivers of the market movement, it's the same old story since the beginning of March. The Iran war is the primary source of motivation and oil prices are frequently the best correlated indicator for bond yields and interest rates."
Indeed, oil prices have remained roughly 40% higher than before the conflict, according to Reuters. This has led to volatility in bond markets, which in turn affects Treasury yields and, by extension, mortgage rates. The 30-year mortgage rate is closely tied to the yield of the 10-year Treasury note, which itself is influenced by expectations for short-term interest rates and a term premium.
On the policy front, the Federal Reserve has opted to keep its key interest rate unchanged at 3.5% to 3.75% as of March 2026, with the next meeting scheduled for April 28-29. Cleveland Fed President Beth Hammack has indicated that rates are likely to remain steady "for a good while." This has left both borrowers and lenders closely watching inflation data and bond market movements for clues about where rates might head next.
For existing homeowners, the recent dip in rates has been a welcome relief. Those who locked in higher rates last year now have a chance to refinance at a lower cost, explaining the sharp rise in refinance applications. But for potential buyers, the story is different. Even with some relief in rates, affordability remains a challenge. The median price for an existing home rose 1.4% year-over-year to $408,800, according to the NAR. Lawrence Yun, the association’s chief economist, described March sales as "sluggish," citing weaker consumer confidence and slower job gains as contributing factors. Inventory remains tight, further squeezing those looking to enter the market for the first time or move up the property ladder.
Government-backed loans also saw a shift. The FHA share of total applications dropped to 18.2% from 19.3% the week prior, while the VA share decreased to 15.7% from 16.1%. The USDA share held steady at 0.5%. Meanwhile, the adjustable-rate mortgage (ARM) share of activity decreased to 8.4%, suggesting that most borrowers are still opting for the stability of fixed-rate loans in uncertain times.
All told, the spring housing market is facing headwinds from several directions. Soaring gas prices, lingering economic concerns, and the aftershocks of the U.S.-Israeli war with Iran have combined to keep many potential buyers on the sidelines. As Keith Griffith of Realtor.com notes, the market is struggling to gain momentum just as it typically heats up for the season.
Looking ahead, much will depend on whether global tensions ease and economic confidence returns. For now, the divide between those refinancing and those buying is likely to persist, with homeowners benefiting most from the recent dip in rates. As always, the housing market remains a barometer of broader economic sentiment—one that’s currently reading as cautious and watchful, if not outright pessimistic.