Mortgage Rates Drop, Boosting Homebuyer Demand in San Francisco

San Francisco, California – Mortgage interest rates have dropped sharply, encouraging homebuyers to take action. The Mortgage Bankers Association (MBA) reported a 9.2% increase in total mortgage application volume in the week ending September 5, compared to the previous week.

The average contract interest rate for a 30-year fixed mortgage decreased to 6.49%, down from 6.64%. This drop marks the lowest rate since October 2024, as Treasury yields fell amid signs of a weakening labor market. Joel Kan, an economist with MBA, stated, “The downward rate movement spurred the strongest week of borrower demand since 2022.”n

Refinance applications saw a significant surge, rising 12% over the week and up 34% from the same week last year. The refinance share of total mortgage activity increased to 48.8%, compared to 46.9% the week before. Kan noted, “Today’s rates could offer some savings for recent buyers.”n

Applications for home purchases also rose, by 7% over the week, with a year-over-year increase of 23%, reaching the highest level since July. Kan added that there was a notable rise in adjustable-rate mortgage (ARM) applications, as ARM rates were more favorable compared to fixed-rate loans.

In the first week of September, mortgage rates saw a decrease of 15 basis points. This shift followed weak employment data, which influenced the expectations for an upcoming Federal Reserve rate cut. As the Fed considers easing rates, many believe this could further impact the housing market positively.

Despite the encouraging trends, the housing market has struggled with high borrowing costs and limited supply in recent months. However, easing interest rates coupled with increasing home availability may suggest a turning point for potential buyers.

As of September 8, 2025, data from Optimal Blue indicates that the average interest rate for a 30-year fixed-rate conforming mortgage is at 6.322%. Although still higher than last year, these rates are more manageable for many homebuyers.