Mortgage demand from homebuyers pulls back, after four weeks of gains
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A ‘For Sale’ sign is posted beside property for sale in Alhambra, California, on August 28, 2025.
Frederic J. Brown | AFP | Getty Images
Mortgage rates fell again last week, but not enough to pull overall demand out of the rut it’s been in for the past month. Total mortgage application volume dropped 1.2% last week compared with 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, $806,500 or less, decreased to 6.64% from 6.69%, with points falling to 0.59 from 0.60, including the origination fee, for loans with a 20% down payment. That was the lowest rate since April.
Applications to refinance a home loan, which are most sensitive to weekly rate changes, increased 1% for the week and were 20% higher than the same week one year ago. This despite the fact that at this time last year, mortgage rates were 21 basis points lower.
Applications for a mortgage to purchase a home dropped 3% for the week and were 17% higher than the same week one year ago. Potential buyers today have a lot more to choose from than they did at this time last year, but prices are also higher than they were, at least on a national level. Affordability is the main barrier standing in the way of stronger sales.
“Refinance applications saw a small increase from the previous week, driven by FHA and VA refinance applications, but conventional refinances declined. The FHA rate is averaging about 30 basis points lower than the conventional rate in 2025, which has made those loans relatively more appealing to eligible borrowers,” said Joel Kan, deputy chief economist at the MBA, in a release. “Purchase activity pulled back, after a four-week run of increases, as slower homebuying activity led to declines in applications across the various loan types.”
Mortgage rates started this week very slightly higher, following a sell-off in the European bond market. There are, however, several significant economic reports coming this week, including the all-important monthly employment report Friday, that could move mortgage rates more significantly in either direction.
