In the wake of mortgage rates reaching an 11-month low last week, mortgage applications have broken their downward streak—increasing in volume for the week ending Sept. 5, according to the Mortgage Bankers Association (MBA).

The market composite index—the measurement for mortgage loan application volume—increased 9.2% last week on a seasonally adjusted basis. However, the index decreased 3% on an unadjusted basis, continuing the index’s declining trend after falling 3% on an unadjusted basis the previous week.

MBA’s Vice President and Deputy Chief Economist, Joel Kan, said, “Mortgage rates declined for the second consecutive week as Treasury yields moved lower on data indicating that the labor market is weakening. The 30-year fixed-rate decreased to 6.49%, down 20 basis points over the past two weeks to the lowest since October 2024.”

Refinances and purchase applications make up the majority of the increases to the total number of loans. The refinance index increased 12% from the previous week and is 34% higher than one year ago. The purchase index also increased by 7% on a seasonally adjusted basis since last week, but in unadjusted terms, it decreased 6%. Still, the unadjusted purchase index is 23% higher than the same time last year.

Refinanced mortgage applications make up the majority of total applications at 48.8%, an increase from the previous survey’s report of 46.9%. Adjustable-rate mortgages (ARMs) also increased to 9.2% of total applications, a small gain from last week’s share of 8.8%.

“The downward rate movement spurred the strongest week of borrower demand since 2022, with both purchase and refinance applications moving higher,” Kan said. “Purchase applications increased to the highest level since July and continued to run more than 20% ahead of last year’s pace. There was also a pickup in ARM applications, both in terms of level and share, as ARM rates were considerably lower than fixed-rate loans, which typically benefits homebuyers.” 

Government-backed loans saw a few ups and downs. The share of FHA applications decreased to 18.5%, and was nearly 20% last week. VA loans increased to 15.3%, up from last week’s share of 13.8%. USDA loan applications break their uniform status by increasing to 0.6% of total loan applications, a slight increase from 0.5% for the past few weeks.

“The holiday-adjusted refinance index had its strongest week in a year and the average loan size for refinances also increased significantly, since borrowers with large loans are more sensitive to bigger rate moves,” Kan said.

The influx of purchase and refinance applications could be a symptom of a balancing market. Although—when coupled with a slowing job market—experts say rate cuts may be coming soon and could impact the falling volume of mortgage applications in the future.

For the full report, click here.

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