Bank of America has reported a significant 80% jump in mortgage applications during the first quarter of 2025, driven by an increase in available home inventory and a decline in long-term bond yields. Matt Vernon, the bank’s head of consumer lending, highlighted that this surge in applications is higher than the typical seasonal increase, noting that the drop in U.S. 10-year bond yields, which serves as a benchmark for mortgage rates, encouraged more buyers to re-enter the market.
The reduction in bond yields, which fell to around 3.6% last September, led to a decrease in the 30-year mortgage rate, dropping to 6.1% by October. Although mortgage rates have slightly risen to 6.7% recently, they remain lower than last year’s rate of 7%. This has contributed to a boost in home buying activity, with Vernon citing that the availability of more inventory has brought stability and growth to the mortgage market.
In addition to home buying, mortgage refinancing interest is also on the rise. However, given that about 80% of Bank of America’s current mortgages have rates below 6%, a further decrease in rates would be necessary to see a significant uptick in refinancing demand. Industry experts also forecast a modest improvement in affordability in the U.S. housing market over the next year, driven by anticipated interest rate cuts.
Meanwhile, UWM Holdings, another major mortgage lender, expects a similar surge in demand, with Chief Strategy Officer Alex Elezaj projecting $28 billion to $35 billion in mortgage originations for the first quarter, up from $27.6 billion a year ago. The company has expanded its workforce to accommodate the expected volume, with employee headcount rising by 35% from the previous year. Both Bank of America and UWM are preparing for increased business activity, as more consumers explore mortgage and refinancing options.
Source: reuters