Mortgage applications uptick pushes refinance demand to four-month high

Homeowners rush to refinance as rates drop

Mortgage applications uptick pushes refinance demand to four-month high

Mortgage activity picked up last week, with refinance applications reaching their strongest pace since October 2024, according to the Mortgage Bankers Association (MBA).

The market composite index, which tracks mortgage loan application volume, also rose 2.3% on a seasonally adjusted basis and 6% on an unadjusted basis. The surge was largely driven by refinancing activity, as the refinance index jumped 10% from the previous week and was 33% higher than the same period last year.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances (up to $766,550) edged down to 6.95% from 6.97% the previous week. The slight dip in rates appears to have encouraged more homeowners to refinance, particularly those with larger loan balances.

Refinance applications accounted for 40.2% of total mortgage activity, up from 39.0% the previous week, highlighting a shift as more borrowers take advantage of recent interest rate movements.

“Mortgage rates moved slightly lower last week, which led to the pace of refinance applications reaching its strongest week since October 2024,” said Joel Kan, vice president and deputy chief economist at MBA. “The average loan size for refinance borrowers increased, as these borrowers tend to be more responsive for a given change in rates.

“Purchase applications were down from the previous week’s level but were slightly ahead of last year’s pace.”

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While refinance applications surged, purchase mortgage applications declined slightly. The seasonally adjusted purchase index fell 2% from the previous week, though the unadjusted purchase index increased 4% week-over-week and was 2% higher than the same period in 2024.

Kan noted that the average loan size for a purchase application climbed to $456,100, the highest level since March 2022. This increase was partially due to a drop in FHA purchase applications, while VA loans saw an uptick compared to the prior week.

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