Rates jumped slightly this week – but fell steadily over the past month, offering good news for borrowers
Mortgage rates may have inched upwards this week for the first time since July, but their steady slide over the summer helped convince plenty of borrowers to re-enter the market and sparked a jump in refinance activity.
Compared with the same time last year, refinances spiked by 42% for the week ended September 25, Freddie Mac said Thursday, as homeowners jumped to lock in lower borrowing costs than their original rate.
Many made their move even before the Federal Reserve’s long-awaited rate cut last week, a 25-basis-point reduction that actually spurred a slight uptick in mortgage rates.
Mortgage brokers also had their eye on the coming refi wave long ahead of the central bank’s September cut. “We’ve seen an influx of business, especially on the refinance side,” Kurt Brandly (pictured top) of Greenside Capital told Mortgage Professional America. “A lot of our clients that purchased either reached out, or we proactively let them know that it might be a good time to refinance.
“We did that prior to the rate drop information coming out because the last time [the Fed cut], we also saw rates go up right after. So we’ve seen a lot of business on the refinance side and very strong, consistent business on the purchase side throughout this season.”
Buyers, homeowners no longer deterred by current rate levels
Patience has been the name of the game for brokers and buyers alike throughout 2025, with rates remaining stubbornly high and economic uncertainty continuing to weigh against the housing market outlook.
Plenty of homeowners and potential buyers were scalded by the rapid interest rate runup seen as the economy emerged from the COVID-19 pandemic in 2022, when rock-bottom borrowing costs gave way to the highest rates for nearly 25 years.
A November 2023 peak of 7.76% for 30-year average fixed rates marked a high not seen since 2000, striking another blow to the pandemic-era homebuying and refinancing boom. But Brandly said mortgage customers have slowly become accustomed to the new reality – and accepted, for the most part, that pandemic-era rates aren’t coming back.
“Right after rates went up in 2022 people were sidelined and scared of what’s going to happen in the future,” he said. “It’s been our reality now for three-plus years and people have started to accept that interest rates are going to be in this area – and at least higher than 2020-21 – for some time.
“So they’ve kind of accepted that this is the market, and they still have homes that they want to purchase. People are still having families. Their incomes are increasing. They’re still out there looking for homes and they’ve accepted that the market is what it is. That’s why we still see purchase volume going up.”
Familiar challenges face first-time buyers despite rate downturn
First-time borrowers across the country are seeing mixed fortunes despite the recent decline in rates. While some are finding more opportunity because of stalled home prices and lower borrowing costs, others remain on the margins because affordability is still out of reach even in a cooler market.
That slowdown means more options and negotiating power for first-time buyers, a rare commodity in recent years with fierce bidding wars a staple of the pandemic-era market.
But high home prices and current mortgage rates are still presenting challenges for buyers who aren’t able to sell an existing home to fund a new purchase.
Still, Brandly said many of those buyer types remain optimistic on the market and their chances of purchasing – if not now, then at some point in the near future.
“It takes a little bit more walking through what [buying] will look like and what the risks are so they can understand it,” he said. “I think first-time homebuyers, and millennials especially, are an extremely strong market.
“And we’re even starting to see it in Gen Z as well. Those two are extremely strong and we’re seeing more of them come to the market.”
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