Homebuyers and refinancers are making a move as market conditions shift
Mortgage applications saw an increase of 3.1% from the previous week, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending August 1, 2025. This rise comes as mortgage rates continued their downward trend, offering some relief to prospective homebuyers and those looking to refinance.
The Market Composite Index, a key indicator of mortgage loan application volume, advanced 3.1% on a seasonally adjusted basis. Unadjusted, the Index climbed 3% compared to the prior week, the report noted.
Refinance activity showed a notable surge, with the Refinance Index increasing 5% from the previous week and standing 18% higher than the same period last year. The seasonally adjusted Purchase Index also saw a 2% increase, while the unadjusted Purchase Index rose 1% and was 18% higher than a year ago.
Joel Kan, MBA’s vice president and deputy chief economist, attributed the shift to declining Treasury yields, which followed economic data signaling a weakening US economy. “As a result, the 30-year fixed rate decreased for the third straight week to 6.77%,” Kan said. “Borrowers sought to take advantage of these lower rates, as both purchase and refinance applications increased over the week.”
Purchase activity continues to outpace 2024, supported by an increasing inventory of homes for sale. However, Kan noted that recent economic weakness has deterred some potential homebuyers. Refinance applications reached their strongest pace in four weeks, reversing a three-week downward trend, with the refinance share of mortgage activity climbing to 41.5% of total applications, its highest level since April. The adjustable-rate mortgage (ARM) share also saw a slight increase to 8.5% of total applications.
In terms of specific loan types, the FHA share of total applications decreased to 18.5% from 18.8% the week prior, while the VA share increased to 13.3% from 12.2%. The USDA share saw a slight decrease to 0.5% from 0.6%.
Interest rates for various mortgage products also saw declines. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) decreased to 6.77% from 6.83%, with points decreasing to 0.59 from 0.60. For 30-year fixed-rate mortgages with jumbo loan balances (greater than $806,500), the rate fell to 6.65% from 6.74%.
FHA-backed 30-year fixed-rate mortgages saw their average rate drop to 6.47% from 6.56%. The average rate for 15-year fixed-rate mortgages decreased to 6.03% from 6.12%, and 5/1 ARMs saw their rate decline to 6.06% from 6.22%. In all these categories, the effective rate decreased from the previous week.
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