U.S. mortgage applications fall 1.2% despite lower rates

Investing.com -- U.S. Mortgage applications decreased 1.2% for the week ending August 29, 2025, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey.

The Market Composite Index, which measures mortgage loan application volume, fell 1.2% on a seasonally adjusted basis from the previous week. On an unadjusted basis, the Index dropped 3% compared to the week before.

The Refinance Index increased 1% from the previous week and was 20% higher than the same week one year ago. Meanwhile, the seasonally adjusted Purchase Index decreased 3%, while the unadjusted Purchase Index fell 6% compared to the previous week but remained 17% higher than the same week last year.

"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.

Kan noted that refinance applications saw a small increase from the previous week, driven by FHA and VA refinance applications, while 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," he explained.

Purchase activity pulled back after four consecutive weeks of increases, with declines in applications across various loan types due to slower homebuying activity.

The refinance share of mortgage activity increased to 46.9% of total applications from 45.3% the previous week. The adjustable-rate mortgage (ARM) share rose to 8.8% of total applications.

Government-backed loans saw increased market share, with FHA applications rising to 19.9% from 19.1% the week prior, and VA applications increasing to 13.8% from 13.3%. The USDA share remained unchanged at 0.5%.

Average interest rates decreased across all loan types:

• 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) fell to 6.64% from 6.69%
• 30-year fixed-rate jumbo mortgages (greater than $806,500) decreased to 6.58% from 6.67%
• 30-year fixed-rate FHA-backed mortgages dropped to 6.31% from 6.35%
• 15-year fixed-rate mortgages declined to 5.84% from 6.03%
• 5/1 ARMs decreased to 5.90% from 5.94%

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