Mortgage Applications Today: Homeowner Refinancing Swells While New Loan Demand Falls for Third Straight Week

Home loan applications decreased by 1.2% from a week earlier for the week ending Aug. 29, according to the Mortgage Bankers Association. This marks the third consecutive week applications have been down.

The decline comes despite mortgage interest rates ticking down to a 10-month low. The average rate on a 30-year fixed home loan was 6.56% for the week ending Aug. 28, according to Freddie Mac. The rate was down from the prior week when it was 6.58%.

The Market Composite Index, a measure of mortgage loan application volume, decreased 1.2% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 3% compared with the previous week. 

The refinance index increased 1% from the previous week and was 20% higher than the same week one year ago.

The seasonally adjusted purchase index decreased 3% from one week earlier. The unadjusted purchase index decreased 6% compared with the previous week and was 17% higher than the same week one year ago.

The amount of homeowners refinancing increased. The refinance share of mortgage activity increased to 46.9% of total applications from 45.3% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 8.8% of total applications.

The Federal Housing Administration (FHA) share of total applications increased to 19.9% from 19.1% the week prior.

Veterans Affairs share of total applications increased to 13.8% from 13.3% the week prior. USDA share of total applications remained unchanged at 0.5% from the week prior.

"Mortgage rates declined last week, with the 30-year fixed rate decreasing to its lowest level since April to 6.64 percent," said Joel Kan, MBA’s Vice President and Deputy Chief Economist. "However, that was not enough to spark more application activity."

Contract rates

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 decreasing to 0.59 from 0.60 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $806,500) decreased to 6.58% from 6.67%, with points decreasing to 0.39 from 0.44 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased again to 6.31% from 6.35%, with points decreasing to 0.74 from 0.80 (including the origination fee) for 80% LTV loans.  The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.84% from 6.03%, with points increasing to 0.84 from 0.77 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 5.90% from 5.94%, with points decreasing to 0.34 from 0.68 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week. 

“Refinance applications saw a small increase from the previous week, driven by FHA and VA refinance applications, but conventional refinances declined," explained Kan. "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. 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 calculated

Mortgage rates are calculated by various factors in the economy, and the length of your loan will also figure into the mortgage rate you qualify for.

The 30-year mortgage rate is tied to the yield of the 10-year Treasury note, according to Fannie Mae. As the yield on the 10-year Treasury note moves, mortgage rates follow.

The yield on the 10-year Treasury note is determined by expectations for shorter-term interest rates in the economy over the duration of a bond, plus a term premium.