Mortgage Applications Surge as Rates Drop for Fourth Week

Alhambra, California – Mortgage interest rates have decreased for the fourth consecutive week, encouraging both current homeowners and potential homebuyers to reach out to lenders. According to the Mortgage Bankers Association‘s seasonally adjusted index, total mortgage application volume rose 7.1% compared to the previous week.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, which are $806,500 or less, fell to 6.30% from 6.37%. Points decreased to 0.58 from 0.59, including the origination fee for loans with a 20% down payment. This marks the lowest rate since September 2024.

Refinance demand, which is particularly sensitive to changes in interest rates, surged 9% for the week and is 111% higher than the same week last year. In contrast to last year, when the average rate on the 30-year fixed mortgage was 43 basis points higher, more homeowners are seizing the opportunity to refinance.

Joel Kan, vice president and deputy chief economist at the MBA, stated, “This recent decline in rates spurred the second consecutive week of increased refinance activity, driven mainly by conventional refinance applications.” He also noted that the ARM (adjustable-rate mortgage) share of applications dipped below 10% last week.

The average loan size for refinance applications remains high at $393,900, allowing borrowers with larger loans to see greater savings. Meanwhile, applications for purchasing a home have risen 5% over the week and are up 20% from the same time last year.

Despite these increases, homebuyers continue to grapple with high prices and economic uncertainty. Kan pointed out, “Purchase applications increased compared to a holiday-shortened week across most loan types. However, USDA applications fell more than 26 percent, impacted by the ongoing government shutdown.”

As the new week begins, mortgage rates have dropped further, according to a separate survey from Mortgage News Daily. Without much government data available due to the shutdown, markets are closely watching Wednesday’s announcement and press conference from the Federal Reserve regarding interest rates.

Matthew Graham, chief operating officer at Mortgage News Daily, commented, “We already know the Fed will be cutting rates, and that rate cut has no bearing on what happens to mortgage rates going forward.” He emphasized that the Fed’s press conference tone and any changes in bond buying policies will be particularly important.