More good news for the market as brokers gear up for fall
Mortgage applications in the United States rose last week as lower interest rates drove more refinancing and steady homebuyer demand, according to new data from the Mortgage Bankers Association (MBA).
The MBA’s Weekly Mortgage Applications Survey for the week ending September 19, 2025, revealed a 0.6% increase in the Market Composite Index, a key measure of mortgage loan application volume. On an unadjusted basis, the index rose 0.1% from the previous week.
The Refinance Index climbed 1% week over week and stood a striking 42% above its level from the same period last year.
Meanwhile, the seasonally adjusted Purchase Index advanced 0.3%, though the unadjusted figure dipped 1% from the prior week. Purchase activity remained 18% higher than a year ago.
“Mortgage rates declined further last week, with the 30-year fixed rate falling to its lowest level since last September to 6.34%,” Mike Fratantoni, MBA’s SVP and chief economist, said.
Falling mortgage rates before the Fed’s announcement gave mortgage brokers some relief in a tough 2025. Pavan Agarwal, CEO of Sun West Mortgage Company, told Mortgage Professional America that inflation will likely determine if these lower rates last into 2026.
Fannie Mae’s Economic and Strategic Research Group, meanwhile, predicted that 30-year mortgage rates will fall to 6.4% by the end of 2025 and drop further to 5.9% by late 2026.
“Interest rates generally have moved up following the FOMC meeting last week but remain in a range that should continue to lead to increased refinance activity. Refinance volume increased further last week and is now 80 percent higher than four weeks ago, accounting for more than 60 percent of all application activity,” Fratantoni said.
Refinance share and government loan trends
Last week’s jump in refinancing came mostly from government loans, with VA refinances up nearly 15%. Although homebuyer demand usually slows in the fall, purchase applications are still strong, 18% higher than this time last year.
The refinance share of mortgage activity increased to 60.2% of total applications, up from 59.8% the week prior. Government-backed refinances drove much of the surge, with VA refinance volume up nearly 15%. The VA share of total applications rose to 17.5%, while the FHA share slipped to 15.7%. The USDA share edged down to 0.4%.
Adjustable-rate mortgage (ARM) activity continued to shrink, accounting for just 8.9% of applications, reflecting borrower preference for fixed rates amid ongoing market volatility.
Rate movements and product breakdown
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) dropped to 6.34%, the lowest in a year. Jumbo loan rates also eased, falling to 6.44%.
FHA-backed 30-year rates held steady at 6.14%, while 15-year fixed rates ticked up to 5.70%. The average rate for 5/1 ARMs decreased to 5.53%.
Broader market context
The uptick in applications comes as the Federal Reserve’s recent policy signals have kept rates in a narrow range, supporting both refinancing and purchase activity.
With rates at their lowest point in a year and refinance activity surging, especially among government-backed loans, the mortgage market showed unexpected strength heading into fall.
In fact, real estate agents across the US and Canada remained largely optimistic about the market’s future, despite a continued slowdown in transaction activity and persistent affordability concerns, according to The Real Brokerage’s August 2025 Agent Survey.
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