Mortgage Applications Continue to Climb as Rates Come Down
Lower rates are driving refinancing higher, but applications are still limited as many people hold sub-5% rates.
Mortgage applications have increased 1.4% for the first week of September, accounting for the Labor Day holiday, according to data from the Mortgage Bankers Association’s (MBA) Weekly Applications Survey. On an unadjusted basis, the index decreased 10% from the previous week.
Meanwhile, the firm’s refinance index increased 1% week over week but was 106% higher than the same week a year ago. MBA’s seasonally adjusted purchase index increased 2% from one week earlier, while the unadjusted purchase index decreased 10% compared with the previous week and was 3% lower than the same week one year ago.
These figures come in as mortgage rates declined for the sixth straight week to 6.29% on a 30-year fixed loan, the lowest rate since February 2023. This is spurring refinance applications, which are running much higher than they were last year but still somewhat limited as many borrowers still have sub-5% rates, the firm noted.
“Borrower demand is rising slowly as mortgage rates have fallen to levels last seen in February 2023,” said MBA president and CEO Bob Broeksmit. “Mortgage applications have now increased in five of the last six weeks, buoyed by a jump in refinance activity. The purchase market is also showing signs of improvement, and MBA expects that to continue as housing supply increases and rates fall further.”
The refinance share of mortgage activity increased to 46.7% of total applications from 46.4% the previous week. The adjustable-rate mortgage (ARM) share of activity decreased to 5.4% of total applications.
The FHA share of total applications increased to 14.7% from 14.6% the week prior. The VA share of total applications decreased to 16.4% from 16.7% the week prior. The USDA share of total applications remained unchanged at 0.4% from the week prior, according to MBA.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased to 6.29% from 6.43%, and for 30-year fixed-rate mortgages with jumbo loans, balances decreased to 6.56% from 6.73%. FHA-backed 30-year fixed mortgages decreased to 6.24% from 6.3%. The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.71% from 5.98%, and for 5/1 ARMs decreased to 5.85% from 5.98%, according to the index.