Aerial view of a neighboring house in San Francisco, California on August 27, 2025.
Justin Sullivan | Getty Images
A sharp drop in mortgage interest rates has finally led some home buyers to leave the fence. It also helped more current homeowners save monthly payments
According to the Mortgage Bankers Association’s Seasonally Adjusted Index, total mortgage applications increased 9.2% compared to last week. This week’s results include adjustments to workers’ holidays.
The average contract interest rate for a 30-year fixed-rate mortgage with conforming loan balances fell below $806,500 from 6.64% to 6.49%, with points falling to 0.56, including the origin fee for a 20% down payment loan.
“Mortgage rates have fallen for two consecutive weeks as Treasury yields have fallen with data showing weaker labor markets,” said Joel Kang, the first MBA economist since October 2024, spurring the strongest week of the strongest movement since 2022.”
As a result, applications for mortgage refinance increased 12% in a week, 34% higher than the same week a year ago. The refinance share of mortgage activities increased from 46.9% the previous week to 48.8% of total applications.
The 30-year fixed is 20 basis points higher than a year ago, but is much lower than the peak of the spring home viewing season in May at the beginning of last year. For buyers these days, today’s fees could offer some savings. The average refinance loan size has also increased significantly. This is because the larger the loan, the greater the potential monthly savings.
Mortgage applications to buy mortgages rose 7% in a week, 23% higher than the same week a year ago. This is the highest level since July.
“We also had the ARM (adjustable mortgage) application picks in both arm rate and share, as it was generally much lower than fixed-rate loans that benefit home buyers,” Kan added.
Mortgage fees have increased very slightly to begin this week, but could move more decisively later in the week. Two important reports on inflation are scheduled to be released on Wednesday and Thursday, and are highly likely to move through the market.
