Mortgage Applications Soar As Rates Hit Lowest Level Since October

Mortgage rates have fallen to their lowest level since last October, spurring a significant increase in mortgage applications last week.

The Details: The average rate on a 30-year loan fell to 6.67% and the Mortgage Bankers Association reported mortgage loan application volume increased 11.2% on a seasonally adjusted basis for the week.

“Mortgage rates declined for the sixth consecutive week, with the 30-year fixed rate dropping to 6.67 percent, the lowest level since October 2024. As a result, applications increased over the week and were up 31% from a year ago," said Joel Kan, MBA's Vice President and Deputy Chief Economist.

Kan also highlighted application activity was up across all loan categories with government purchase applications rising 11% as the FHA rate fell to 6.34 percent.

The Refinance Index surged 16% from the previous week and refinance applications were up 90% from the same week last year. The total number of refinance applications remains low, leading to a large percentage increase.

However, homebuyers who purchased within the last two years may be able to refinance at a slightly lower rate now, which contributed to the refinance share of mortgage activity increasing to 45.6% of total applications, up from 43.8% the previous week.

Mortgage rates are closely tied to the yields on long-term government bonds, specifically the 10-year Treasury bond. The yield on the 10-year US Treasury note rose above 4.33% on Wednesday after softer-than-expected inflation data eased concerns about the strength of the U.S. economy.

The iShares 20+ Year Treasury Bond ETF TLT fell 0.34% to $90.09 at 10 a.m. ET Wednesday.

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