Quick Read
- Mortgage Bankers Association reported a 5 percent weekly rise in purchase mortgage applications and a 9% increase in refinancing requests, with refinance demand up 111 percent year over year.
- 30-year fixed mortgage rates dropped to 6.30 percent last week, the lowest since September 2024, spurring increased refinance activity mostly driven by conventional refinances, according to MBA Deputy Chief Economist Joel Kan.
- The Federal Reserve’s recent 25 basis point rate cut and end of quantitative tightening were anticipated by markets, with MBA Chief Economist Mike Fratantoni expecting little impact on mortgage rates.
- MBA forecasts 2026 average mortgage rates at 6.4 percent, while Fannie Mae anticipates further declines to around 5.9 percent by late 2026, reflecting divergent outlooks among economists.
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Rates on 30-year fixed-rate mortgages hit another 2025 low on Tuesday, dropping to 6.12 percent, nearly a full percentage point lower than January. Rates now have less room to come down.
The continued slide in mortgage rates had homebuyers applying for loans in greater numbers last week, with purchase applications picking up by a seasonally adjusted 5 percent from the week before, the Mortgage Bankers Association reported Wednesday.
Applications for purchase mortgages were up 20 percent from a year ago. But the survey showed an even bigger boost in refinancing demand, with loan applications from existing homeowners up 9 percent week over week and 111 percent from a year ago.
Joel Kan
“Mortgage rates decreased for the fourth consecutive week, with the 30-year fixed rate down to 6.30 percent, its lowest level since September 2024,” MBA Deputy Chief Economist Joel Kan said in a statement[1]. “This recent decline in rates spurred the second consecutive week of increased refinance activity, driven mainly by conventional refinance applications.”
TAKE THE INMAN INTEL SURVEY FOR OCTOBER[2]
Applications to refinance accounted for 57 percent of all loan applications.
Mortgage rates hit another new 2025 low
Rates on 30-year fixed-rate mortgages hit another 2025 low on Tuesday, dropping to 6.12 percent, according to lender data tracked by Optimal Blue[3]. That’s a drop of 93 basis points from the high for the year of 7.05 percent registered on Jan. 14. A basis point is one hundredth of a percentage point.
The Federal Reserve Board approved its second rate cut of the year[4] on Wednesday, as expected, bringing its target for the short-term federal funds rate down 25 basis points to 3.75 percent and 4 percent.
But the Fed doesn’t have direct control over mortgage rates, which may not have much more room to come down given that investors who fund most home loans through purchases of mortgage-backed securities have already priced in expectations for future Fed rate cuts.
Fed policymakers also announced they will end “quantitative tightening” balance sheet runoffs on Dec. 1.
But as “these moves were anticipated by the market, MBA does not expect any significant changes to mortgage rates as a result,” MBA Chief Economist Mike Fratantoni said, in a statement. “Mortgage rates are currently around their low for the year and this has spurred both refinance and purchase activity.”
Last year, 30-year fixed-rate mortgages bottomed out at 6.03 percent on Sept. 17, but climbed back above 7 percent when the Fed started cutting short-term rates only to see inflation flare up again.
When central bank policymakers trimmed the federal funds rate by a full percentage point at the end of 2024, mortgage rates went up[5] by an equal amount as MBS investors demanded higher yields.
Rate forecasts diverge
Source: Fannie Mae[6], forecasts October 2025.
While MBA economists predict[7] rates will average 6.4 percent next year, Fannie Mae economists[8] think they’ll continue to drop, averaging 6 percent in Q2 and Q3 2026 and falling to 5.9 percent in the final three months of the year.
Purchase loan application demand
Source: Mortgage Bankers Association Weekly Applications Survey[9].
At 164.3 for the week ending Oct. 24, the MBA’s seasonally adjusted purchase index was up 29 percent from a 2025 low of 127.7 registered during the week ending Jan. 3, but down 9 percent from this year’s high of 180.9 in the first week of July.
Get Inman’s Mortgage Brief Newsletter delivered right to your inbox. A weekly roundup of all the biggest news in the world of mortgages and closings delivered every Wednesday. Click here to subscribe.[10][11]
References
- ^ statement (www.mba.org)
- ^ TAKE THE INMAN INTEL SURVEY FOR OCTOBER (www.research.net)
- ^ Optimal Blue (www2.optimalblue.com)
- ^ second rate cut of the year (www.federalreserve.gov)
- ^ mortgage rates went up (fred.stlouisfed.org)
- ^ Fannie Mae (www.fanniemae.com)
- ^ MBA economists predict (www.inman.com)
- ^ Fannie Mae economists (www.fanniemae.com)
- ^ Weekly Applications Survey (www.mba.org)
- ^ Mortgage Brief Newsletter (www.inman.com)
- ^ Click here to subscribe. (www.inman.com)
- ^ Email Matt Carter (www.inman.com)