Mortgage rates aren’t low enough to spur application activity

Despite a drop in mortgage rates last week, mortgage applications decreased 1.2% from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey for the week ending Aug. 29, 2025.

On an unadjusted basis, the index decreased 3% compared with last week.

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

The refinance index increased 1% from the previous week and was 20% higher than the same week one year ago. The refinance share of mortgage activity increased to 46.9% of total applications from 45.3% the previous week.

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.

Kan continued, “Refinance applications saw a small increase from the previous week, driven by FHA and VA refinance applications, but 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. 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.”

Every product, aside from the USDA share of applications, which remained unchanged at 0.5% from last week, saw an increase in activity. The adjustable-rate mortgage (ARM) share of activity increased to 8.8% of total applications, the FHA share of total applications increased to 19.9% from 19.1% the week prior, and the VA share of total applications increased to 13.8% from 13.3% the week prior.

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%. The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances also decreased, shifting down to 6.58% from 6.67%.

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 6.31% from 6.35% and the average contract interest rate for 15-year fixed-rate mortgages decreased to 5.84% from 6.03%.

The average contract interest rate for 5/1 ARMs decreased to 5.90% from last week’s 5.94%.