Lower mortgage rates spark refinance, VA applications

Mortgage applications continued to rise last week, up 10.9% from one week earlier. That’s according to data from the Mortgage Bankers Association’s (MBA) weekly mortgage applications survey for the week ending August 8, 2025.

On an unadjusted basis, the index increased 10% compared with the previous week.

The refinance index continued to rise, increasing 23% from the previous week. It was 8% higher than the same week one year ago. The refinance share of mortgage activity increased to 46.5% of total applications from 41.5% last week.

“The 30-year fixed mortgage rate declined to 6.67% last week, which spurred the strongest week for refinance activity since April. Borrowers responded favorably, as refinance applications increased 23%, driven mostly by conventional and VA applications,” said Joel Kan, MBA’s vice president and deputy chief economist. “Refinances accounted for 46.5% of applications, and as seen in other recent refinance bursts, the average loan size grew significantly to $366,400. Borrowers with larger loan sizes continue to be more sensitive to rate movements.”

Added Kan, “Given the relative attractiveness of ARM rates compared to fixed rate loans, ARM applications increased 25% to their highest level since 2022, and the ARM share of all applications was almost 10%. However, lower rates were not enough to entice more homebuyers back into the market, as purchase applications were only up around 1% over the week, although still stronger than last year’s pace.”

The unadjusted purchase index increased 1% compared with the previous week and was 17% higher than the same week one year ago.

Looking at the share of applications, the adjustable-rate mortgage (ARM) share of activity increased to 9.6% of total applications. The FHA share of total applications, meanwhile, decreased to 18.4% from 18.5% the week prior.

The VA share of total applications increased to 14.2% from 13.3% the previous week, and the USDA share of total applications remained unchanged at 0.5%.

While the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased, interest rates for 30-year fixed-rate mortgages with jumbo loan balances increased to 6.70% from 6.65%.

FHA interest rates decreased to 6.40% from 6.47%, and the average contract interest rate for 15-year fixed-rate mortgages also decreased to 5.93% from 6.03%.

The average contract interest rate for 5/1 ARMs decreased to 5.80% from 6.06%.