After four weeks of consecutive drops in activity, mortgage applications break the streak with gains for refinance and purchase applications.
The Mortgage Bankers Association (MBA) reports that the market composite index—the measure of mortgage loan activity volume—increased 7.1% on a seasonally adjusted basis for the week ending Oct. 24. The index increased at nearly the same rate on an unadjusted basis, and marks the first time in four weeks that activity has grown week-over-week.
Previously, the MBA reported a 0.3% drop in the market index and cited the lowering 30-year fixed-rate mortgage as a possible cause. In September, mortgage applications experienced a 30% jump as applicants prepared for the Federal Reserve’s (Fed) 0.25% cut to interest rates.
Although the Fed lowered interest rates in response to a struggling labor market and elevated inflation, experts are somewhat conflicted on whether the board will vote later today to further lower rates. Lisa Sturtevant—Bright MLS’ chief economist—noted that the Fed will likely cut interest rates by a quarter of a percentage point, in a statement earlier last week.
The uptick in total mortgage applications can be attributed to the rise in refinance and purchase applications. The refinance index increased 9.3% on both a seasonally adjusted and unadjusted basis. Compared to the same time last year, refinance activity is up 111%.
As for purchase applications, the index is 4.5% higher than the previous week on a seasonally adjusted basis, and is 3.7% higher on an unadjusted basis. The purchase index is also higher than the same period in 2024, by about 20%.
Joel Kan—MBA’s vice president and deputy chief economist—explained that the growth in refinance applications is a result of low mortgage rates.
“Mortgage rates decreased for the fourth consecutive week, with the 30-year fixed-rate down to 6.3%, its lowest level since September 2024,” he said. “This recent decline in rates spurred the second consecutive week of increased refinance activity, driven mainly by conventional refinance applications.”
The share of refinance applications increased to 57.1% of total applications, up slightly from last week’s share of nearly 56%.
Activity for adjustable-rate mortgages (ARMs) declined significantly, after experiencing a 16% increase in the previous survey. The ARM index decreased by nearly 12% from the previous week, and the share of ARM applications decreased to 8.9% of total applications (previously the share of ARMs was 10.8%).
“The ARM share of applications, which had been trending higher, dipped below 10% last week, as lower rates prompted more borrowers to choose fixed-rate loans,” Kan noted.
Government-backed loans saw varying degrees of change in the past week. The volume of FHA applications increased by only 0.8% from last week, after jumping 6% in the previous survey. The share of FHA applications decreased alongside the minor increase in activity, now accounting for 20.5% after being 21.8% last week.
VA loans saw a 6.7% seasonally adjusted increase in activity, and applications increased at nearly the same rate on an unadjusted basis. Although activity increased for VA applications, its share dropped slightly, going from 13.5% in the previous week to 13.4% currently.
Kan states that USDA applications have been feeling the brunt of the government shutdown’s effects, falling by more than 26% on both a seasonally adjusted and unadjusted basis.
“Additionally, the average loan size of a refinance application remained elevated at $393,900, as borrowers with larger loan sizes continue to be sensitive to rate movements,” he said.
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