usMarkets_newsStory

Mortgage Applications Drop for Second Consecutive Week as Refinancing Declines

11:47 AM ET 10/08/2025 - MT Newswires

The market composite index, which measures loan application volume, dipped 4.7% on a seasonally adjusted basis for the week through Friday, and fell 5% without adjustments.

It dropped about 13% in the prior week, when mortgage rates hit a three-week high.

"With mortgage rates on fixed-rate loans little changed last week, refinance application activity generally declined, with the exception of a modest increase for (Federal Housing Administration) refinance applications," Mike Fratantoni, the association's chief economist, said in a statement.

The refinance index fell 8% sequentially but was up 18% year over year. Applications for new home purchases declined 1% on a seasonally adjusted basis from a week ago, but rose 14% annually.

"Refinance volume remains somewhat elevated relative to levels of a month ago," Fratantoni said.

The average interest rate for 30-year fixed mortgages with conforming loan balances of $806,500 or less fell to 6.43% from the previous week's 6.46%. For loan balances greater than $806,500, the rate climbed to 6.60% from 6.54%, while the rate for 15-year loans ticked higher to 5.77% from 5.76%.

The rate for 30-year loans backed by the FHA dropped to 6.19% from the prior week's 6.24%, MBA data showed. The share of FHA-backed loans, which are often used by first-time home buyers and can involve smaller down payments, rose to 18.5% from 16.8%.

The share of adjustable-rate mortgage grew to 9.5% from 8.4%.

"Our survey shows 5/1 ARM rates are averaging almost a percentage point below 30-year fixed rates, and this differential is leading more purchase and refinance applicants to consider ARMs," Fratantoni said.

Late last month, S&P Global (SPGI) division S&P Dow Jones Indices said US home prices fell sequentially in July, while the annual growth rate was one of the weakest in the last 10 years.

Last week, News Corp's (NWS, NWSA) Realtor.com said nearly 20% of US home listings saw price reductions in September amid growing inventory that gives buyers more negotiating power.

Price: 482.51, Change: +1.29, Percent Change: +0.27