Mortgage Rates Drop: A Spike in Applications

On March 5, 2025, a ‘For Sale’ sign graced a property in Pasadena, California, marking a vibrant moment in the housing market.

Mortgage Rates at a New Low

Recent data reveals that mortgage rates have fallen to their lowest point since October of the previous year, resulting in a notable increase in demand from potential homebuyers. The Mortgage Bankers Association (MBA) reports that total mortgage applications surged by 11.2% in the past week.

Details on Mortgage Rates

The average interest rate for 30-year fixed mortgages with conforming loan balances, which are $806,500 or less, decreased to 6.67% from the previous week’s 6.73%. Additionally, associated points climbed to 0.63 from 0.60, factoring in the origination fee for loans where buyers made a 20% down payment. Notably, this reflects a decrease of 17 basis points compared to the same week last year.

Joel Kan, an economist at the MBA, commented, “Mortgage rates declined for the sixth consecutive week, with the 30-year fixed rate dropping to 6.67%, the lowest level since October 2024.”

Increased Refinancing Applications

Applications aiming to refinance home loans saw a substantial rise of 16% from the previous week, presenting a striking 90% greater volume compared to the same week one year prior. Most existing homeowners currently possess rates significantly lower than current offerings, yet those who purchased homes in the last two years may now benefit from refinancing options due to the recent drop in rates. This percentage increase is particularly pronounced because the overall volume remains relatively low.

Home Purchase Applications Rise

Applications for obtaining mortgages to purchase homes also experienced growth, up by 7% over the past week and marking a 4% increase from the same period last year. The upward trend continues as the spring homebuying season approaches, with activity increasing across various loan categories.

Government purchase applications saw an 11% rise, aided by a decrease in FHA rates to 6.34%. Additionally, average loan sizes have witnessed a jump, with the typical purchase loan amount reaching $460,800, a figure that represents the highest in the survey since tracking began in 1990.

Current Rate Trends

As the week began, mortgage rates remained largely stable following slight fluctuations—declining on Monday and then increasing again on Tuesday. Looking ahead, the monthly consumer price index release could significantly influence future rate movements, as it serves as a key indicator of inflation.