Mortgage Applications Rise Amidst Middle East Volatility
As the conflict in the Middle East continues, U.S. Mortgage rates have experienced fluctuations, leading to a split in demand for mortgages during the week ending March 7, 2026. Refinancing applications have decreased, while homebuyer demand is showing signs of increasing with the start of the spring market.
Mortgage Application Volume Increases
Total mortgage application volume rose 3.2% for the week, according to the Mortgage Bankers Association (MBA)’s seasonally adjusted index.1 The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($832,750 or less) increased to 6.19% from 6.09%, with points rising to 0.58 from 0.52, including the origination fee, for loans with a 20% down payment.1
“Financial markets were volatile last week amid the ongoing turmoil in the Middle East,” said Mike Fratantoni, chief economist at the MBA, in a release.1 “Borrowers in recent weeks were able to get 30-year conforming rates below 6 percent, but with the current volatility, longer-term rates have moved up.”
Refinance and Purchase Activity
Applications to refinance a home loan rose just 0.5% from the previous week but remain 81% higher than the same week one year ago.1
The seasonally adjusted purchase index increased 7.8% for the week and was 11% higher than the same week one year ago.1 With improving weather conditions across much of the country, buyer activity is picking up, though high prices continue to prompt some to seek lower down payment loans.
“Purchase activity increased last week, particularly for FHA loans, which moved up more than 11 percent,” added Fratantoni.1 “More inventory on the market is supporting more transactions.”
Inventory and Adjustable-Rate Mortgages
Despite increased inventory, the supply of homes remains below pre-pandemic levels. A report from the National Association of Realtors showed a 3.8-month supply of homes for sale in February. A balanced market is generally considered to be six months.1
Consumers are also increasingly considering adjustable-rate mortgages (ARMs), which offer lower initial interest rates but carry a higher risk. The ARM share of total applications increased to nearly 9% last week.1
Looking Ahead
Mortgage rates experienced a slight decrease at the beginning of the week, according to Mortgage News Daily.1 Bond yields are expected to remain volatile in response to developments regarding the conflict in the Middle East and the upcoming release of the Consumer Price Index (CPI) on Wednesday.1