Mortgage applications declined last week following the previous week’s boost in mortgage activity, according to the latest figures from the Mortgage Bankers Association (MBA).
The MBA’s Mortgage Composite Index (MCI), which measures mortgage loan application volume, fell 1.9% on a seasonally adjusted basis from the previous week. The index fell 3% on an unadjusted basis.
Refinances continued to make up the largest share of total mortgage activity, slipping to 57% from 57.1% the week prior. The refinance component index of the MCI fell 3% from the previous week but was 151% higher than the same week last year.
“The average loan size for refinance applications was at its highest level in six weeks, as borrowers with larger loans continued to seek ways to lower their monthly payments,” commented Joel Kan, deputy chief economist at the MBA, in a press release.
After increasing 5% the week prior, purchase applications gave up ground last week, decreasing 1% on a seasonally adjusted basis. The unadjusted Purchase Index fell 2% compared to the previous week and was 26% higher than the same week last year.
Kan also noted that “mortgage rate movements were mixed last week” as yields on U.S. Treasurys moved higher in response to the Federal Reserve’s decision to lower the fed funds rate by 0.25% for the second consecutive month.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances remained essentially flat at 6.31% from 6.3% the week prior, hovering around its lowest levels since September 2024, according to the MBA.
The average interest rate for 30-year fixed-rate mortgages backed by the Federal Housing Administration (FHA) also remained flat at 6.13% from 6.12% the previous week.
The FHA share of applications fell to 18.5% from 20.5% the week prior, while the share of applications for loans backed by the Department of Veterans Affairs increased to 14.9% from 13.4% the previous week.
The adjustable-rate mortgage (ARM) share of activity decreased to 8.7% of total applications, slightly below the previous week’s 8.9%. The ARM share of applications had climbed to nearly 11% two weeks prior.
On the other hand, the average contract interest rate for 5/1 ARMs — whereby a borrower pays a fixed mortgage rate for the first five years of the loan term, after which it adjusts on an annual basis — regained the ground it lost last week, falling 10 basis points to 5.56%.
