Pent up demand?

Mortgage applications jumped 20.4% in early March 2025 as rates fell to 6.73%—the lowest since December 2024. However, the causal story is more complex than "rates dropped, demand surged."

Key nuances:

• Refinance applications drove the surge with a 37% weekly increase, while purchase applications rose only 9%. This suggests existing homeowners reacting to rate changes, not a fundamental shift in buyer demand.
• Purchase applications remained just 2% above the prior year—hardly robust growth despite the headline surge.
• The rate drop stemmed from economic pessimism and tariff uncertainty, not improving conditions. Falling rates here signal deteriorating economic expectations.
• Mortgage rates reversed course immediately after, erasing the decline. The "surge" may capture a brief window rather than a trend.

The article's framing assumes rate drops unambiguously boost the housing market. In reality, rates fell for concerning reasons (economic weakness), the spike was concentrated in refinancing rather than new purchases, and the effect proved transient. The 20% figure overstates the health of housing demand.

Sources:
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