Last week, mortgage applications dropped 1.2% on a seasonally adjusted basis from the previous week, according to the latest figures from the Mortgage Bankers Association (MBA).

The Market Composite Index (MCI), a measure of mortgage application volume, notched its third consecutive week of declines despite slight improvements in borrowing costs.

The seasonally adjusted Purchase Index fell 3% after posting its strongest gains in a month the week prior. The unadjusted Purchase Index declined 6% but remained 17% higher than the same week one year ago.

“Mortgage rates declined last week, with the 30-year fixed rate decreasing to its lowest level since April to 6.64%,” noted Joel Kan, vice president and deputy chief economist at the MBA, in a press release. “However, that was not enough to spark more application activity.”

The refinance component of the MBA’s Weekly Mortgage Application Survey improved slightly, rising 1% from the previous week and 20% from the same week one year ago, as the refinance share of overall mortgage activity increased to 46.9% from 45.3% the previous week. Conventional refinances declined.

“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,” Kan explained.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances — defined as $806,500 or less — decreased to 6.64% from 6.69%, while the average contract interest rate for 30-year fixed-rate mortgages backed by the Federal Housing Administration (FHA) decreased to 6.31% from 6.35%.

The FHA share of applications rose to 19.9% from 19.1% the week prior, while the Veterans Affairs share of total applications increased to 13.8% from 13.3% the previous week. The U.S. Department of Agriculture share of total applications remained flat at 0.5%.

The adjustable-rate mortgage share of activity increased to 8.8% of total applications from 8.4% for the week ending Aug. 22.