The Latest Data on Mortgage Applications, Mortgage Rates and Inflation Expectations

National Mortgage Activity Shows a Market in Pause Mode

The latest mortgage data reveals subtle shifts, but no major directional change. Overall activity declined slightly, signaling a market that is stabilizing rather than accelerating.

Mortgage Demand Softens Slightly

According to the Mortgage Bankers Association, the Mortgage Market Composite Index fell 0.8% week-over-week. This decline indicates a modest pullback in total loan application volume. However, this movement is not dramatic. Instead, it reflects a market that is adjusting to current rate levels rather than reacting sharply.

Refinancing Remains Weak

Refinance applications dropped 3% from the previous week. They are also 4% lower than the same time last year. This matters because refinancing is highly rate-sensitive. With the average 30-year mortgage rate at 6.38%, most homeowners have little incentive to refinance. As a result, refinance activity continues to signal limited rate-driven movement in the market.

Purchase Activity Shows Short-Term Strength

Purchase applications increased 1% week-over-week. This suggests some buyers are re-entering the market. However, purchase demand is 7% lower than one year ago – the first negative YoY since January 2025. The YoY numbers started compressing after the Iran war. In simple terms, demand exists, but it remains constrained compared to previous levels.

Rates and Market Spread Matter

The current 30-year mortgage rate sits at 6.38%. The spread over the 10-year Treasury is 212 basis points. This spread is important because it reflects the cost of borrowing beyond baseline market rates. A wider spread means higher borrowing costs for buyers and more perceived risk in the market.

Inflation Expectations Are Stable

Inflation expectations remain anchored despite what’s been going on with oil prices and news headlines. The benchmark the Fed uses to measure inflation expectations, the 5-Year Forward Inflation Expectation Rate, is sitting at 2.10% as of 4/8/26. The 10-Year Breakeven Inflation Rate is at 2.33%. It’s slightly up since the pre-Iran war (2.05 for the 5-yr and 2.3 for the 10-yr).

To give some context here, inflation expectations in 2022, when the Russia-Ukraine war broke out, inflation expectations peaked in April at 2.67 for the 5-yr and 3.02 for the 10-yr. Per FRED’s data, the historical 5-yr median is 2.29 and 2.33 for the 10-yr median. Yes, inflation expectations are up this year, but relative to other periods, expectations are fairly anchored and in the case of the 5-yr, below the historical median, and in the case of the 10-yr, at the historical median.

What This Means Housing

Expect mild absorption rates, muted reactions, and “wait-and-see” behavior. For sellers, you’re not in a bad market – you’re in a selective one. Price precision matters more than ever and the condition of the home is now a pricing tool. For buyers, you have less competition right now and more negotiation leverage.