Mortgage applications dipped again last week, though the pace of decline slowed considerably. The Mortgage Bankers Association (MBA) reported a 0.8% decrease on a seasonally adjusted basis for the week ending April 3. Refinance activity continued to weaken, with the Refinance Index falling 3% from the previous week and now sitting 4% below year-ago levels. The slowdown reflects a sharp drop in borrower incentive following the recent run-up in rates. Purchase activity showed modest resilience, with the seasonally adjusted Purchase Index rising 1% from the prior week. However, demand remains softer overall, with purchase applications down 7% compared to the same time last year—the first annual decline since early 2025. MBA’s Joel Kan said “higher mortgage rates and continued economic uncertainty weighed down on mortgage applications again last week,” adding that refinance demand has dropped to its lowest level since December 2025. He also pointed out that some segments of the market are holding up better, particularly FHA and ARM loans, which continue to benefit from relatively lower rates and improving housing inventory in certain markets. Application composition shifted slightly, with refinance share decreasing to 44.3% from 45.3% the prior week. ARM share increased to 8.6% . FHA share edged down to 19.3% , while VA share held steady at 16.1% and USDA share remained unchanged at 0.5% .

If we’re splitting hairs, today’s average mortgage rates are technically higher than yesterday’s, but the change is so small that it’s just as fair to say that rates are flat. This closes out a week with surprisingly low volatility compared to that seen in March. In part, this can be attributed to longer-term oil prices being less volatile after moving down from their highs in late March. It’s also a reflection of uncertainty surrounding the outcome of the Iran war. The war (specifically, the economic/inflation implications) continue to be primary source of motivation for rates even in the presence of economic data that would normally have an impact. Reason being: we haven’t yet received big-ticket econ reports that have had a chance to bake in too much of the war’s impact. Today’s CPI inflation data was one of the first, but it came in close enough to forecasts to avoid making a strong case for rate volatility. 

The median forecast for monthly core CPI was 0.28% (0.3 after rounding up for most econ calendars). Today’s actual number was 0.196–obviously quite a bit lower than forecasts. In addition, supercore fell to .179 from .349. Despite those victories, forecasts correctly predicted a sharp rise in headline inflation which moved up from 2.4% to 3.3% year over year.  Apparently, it’s hard to get excited about buying bonds with headline inflation over 3%, no matter how much one expects it. Yields are actually modestly higher after the data, adding to modest overnight weakness. That said, through 6am, 10yr yields have held in a narrow range that has topped out 2bps below yesterday’s highs. 

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Roughly Unchanged After Moderate Headline-Driven Volatility

As has been the recent custom, there were dueling headlines concerning the Iran war today with opposing claims regarding the status of the Israel/Lebanon ceasefire. If that sounds like kind of a stretch when it comes to bond market significance, bond traders agreed.  That said, it was still traded to some extent. This resulted in mid-day volatility that took bonds from slightly weaker to slightly stronger territory, and then back to being roughly unchanged. Econ data was a relative non-event in the morning, but Friday’s data has a slightly better chance of garnering a response.

Econ Data / Events

Jobless Claims (Apr)/04

219K vs 210K f’cast, 202K prev

Continued Claims (Mar)/28

1794.0K vs 1840K f’cast, 1841K prev

Core PCE (m/m) (Feb)

0.4% vs 0.4% f’cast, 0.4% prev

Core PCE (y/y) (Feb)

3.0% vs 3% f’cast, 3.1% prev

GDPQ4

0.5% vs 0.7% f’cast, 4.4% prev

GDP Final SalesQ4

0.3% vs 0.4% f’cast, 4.5% prev

Market Movement Recap

08:37 AM Very flat overnight. Slightly weaker after data. MBS down 2 ticks (.06) and 10yr up half a bp at 4.30

10:31 AM weakest levels. MBS down 9 ticks (.28) and 10yr up 1.4bps at 4.311

11:38 AM 10s now down 1bp at 4.285. MBS are within 1 tick (.03) of unchanged.

01:39 PM Best levels of the day for 10s, down 3.2bps at 4.264.  MBS unchanged (also near opening highs).

03:37 PM Off the best levels, but not with sustained selling. MBS down 2 ticks (.06) and 10yr down 1bp at 4.288

The overnight session leading into this morning’s open was completely sideways–especially compared to yesterday’s example. The boatload of econ data line items did nothing to change that. Expectations weren’t high anyway. GDP (Q4) and monthly PCE (February) are both too stale to matter. Jobless Claims were a mixed bag with initial claims rising substantially and continued claims falling off a cliff (lowest since May 2024). But again, bonds have done nothing with the data and trading levels are almost perfectly flat to start another day of watching war headlines.