Mortgage applications rose for the first time in four weeks as interest rates continued their downward slide, offering some relief to borrowers amid signs of broader economic softening.
According to new data released by the Mortgage Bankers Association, the group’s Market Composite Index — a benchmark measure of total mortgage application volume — increased 3.1% on a seasonally adjusted basis in the week ending August 1, 2025. On an unadjusted basis, the index rose 3% from the prior week.
Refinancing activity led the gains, with the Refinance Index jumping 5% week-over-week and climbing 18% from the same week last year. Meanwhile, the Purchase Index rose 2% on a seasonally adjusted basis and 1% unadjusted, also up 18% year-over-year — a signal that for-sale housing inventory is continuing to support home buying activity.
“Mortgage rates moved lower last week, following a drop in Treasury yields as fresh economic data pointed to weakening momentum in the U.S. economy,” said Joel Kan, MBA’s deputy chief economist. “This prompted an uptick in both purchase and refinance applications as borrowers looked to take advantage of more favorable rate conditions.”
The average rate on a 30-year fixed mortgage with conforming loan balances ($806,500 or less) fell to 6.77%, the lowest level in three weeks, down from 6.83% the previous week. Jumbo loans saw a similar trend, with the 30-year fixed rate easing to 6.65% from 6.74%. Rates for FHA-backed 30-year mortgages dropped to 6.47%, while the 15-year fixed rate fell to 6.03%. The average rate for 5/1 adjustable-rate mortgages (ARMs) declined to 6.06%.
The effective rates — which factor in points and fees — also declined across all mortgage categories.
The refinance share of overall mortgage activity increased to 41.5%, its highest level since April, up from 40.7% the week prior. ARM share also ticked higher to 8.5%, reflecting marginally increased borrower appetite for adjustable-rate products amid rate volatility.
Kan noted that refinance applications posted their strongest pace in a month after falling for three consecutive weeks. “While overall demand remains below pre-pandemic norms, the recent drop in rates is helping bring some sidelined borrowers back into the market,” he added.
Among loan programs, the share of applications backed by the Federal Housing Administration (FHA) edged down to 18.5% from 18.8%, while those guaranteed by the Department of Veterans Affairs (VA) rose to 13.3% from 12.2%. USDA-backed loan share slipped to 0.5%.
The latest MBA data adds to a growing list of indicators suggesting that while housing market headwinds persist, modest rate relief and improving inventory may offer near-term support — especially if the economy avoids a deeper slowdown in the second half of the year.
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