A “For Sale” sign hangs next to a property for sale in Alhambra, California.
Frederick J. Brown | AFP | Getty Images
Last week, mortgage rates fell for the fourth straight week, prompting both current homeowners and potential home buyers to call their lenders. Total mortgage application volume increased 7.1% from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $806,500 or less, including origination fees for loans with a 20% down payment, decreased by a point from 0.59 to 0.58 and from 6.37% to 6.30%. This is the lowest level since September 2024.
Refinance demand, which is most sensitive to changes in interest rates, rose 9% for the week and 111% compared to the same week last year. At this time last year, the average interest rate on a 30-year fixed rate was 43 basis points higher.
“This recent drop in interest rates has led to the second consecutive week of increased refinance activity, primarily driven by traditional refinance applications,” Joel Kang, MBA vice provost and deputy chief economist, said in a release. “The share of applications for ARMs (adjustable rate mortgages) has been on the rise, but fell below 10% last week as more borrowers opted for fixed-rate loans as interest rates fell.”
Kang also noted that the average loan size for refinance applications still rose to $393,900, as borrowers with larger loans can save more on refinancing.
The number of applications for mortgages to buy homes increased by 5% over the week and by 20% compared to the same week last year. Homebuyers continue to face rising prices and increased economic uncertainty.
“Purchase applications increased for most loan types compared to the holiday shortened week. However, USDA applications were down more than 26% due to the ongoing government shutdown,” Kang added.
Mortgage rates have fallen further this week, according to a separate Mortgage News Daily survey. But with little government data due to the government shutdown, markets are paying more attention than usual to Wednesday’s Federal Reserve announcement and press conference on interest rates.
“We already know the Fed is going to cut rates, but that cut has no bearing on what happens to mortgage rates going forward,” said Matthew Graham, chief operating officer of Mortgage News Daily. “Rather, it will be the tone of the Fed’s press conference, or the nature of changes to the Fed’s bond purchasing policy that may be included in the statement.”
