Refi Demand Falls, But Still Higher Than Early 2025 Levels

By: Matthew Graham •

Mortgage application activity weakened again last week, with higher mortgage rates weighing on both purchase and refinance demand. The Mortgage Bankers Association (MBA) reported a 4.1% decrease in total application volume on a seasonally adjusted basis for the week ending September 11. The results include an adjustment for the Labor Day holiday.

Purchase applications fell 1% from the previous week on a seasonally adjusted basis. The unadjusted Purchase Index dropped 13%, although that figure was heavily affected by the holiday. More notably, purchase activity was 19% lower than the same week one year ago, reversing the modest year-over-year gains seen in recent weeks.

Refinancing continued to lose ground as well. The Refinance Index fell 9% from the previous week and was 65% below year-ago levels. Refinances accounted for just 39.4% of total application volume, down from 40.9% the previous week and marking another step lower as elevated rates eliminate much of the potential benefit for borrowers who might otherwise refinance.

"Mortgage rates followed and were almost 7%," said Joel Kan, MBA's Vice President and Deputy Chief Economist, citing ongoing concerns over spiking energy prices, persistently high inflation, and future monetary policy. Kan noted that the 30-year fixed rate reached 6.97%, its highest level since May 2025, as the 10-year Treasury yield moved closer to 5%.

Higher rates also pushed borrowers away from adjustable-rate mortgages. The ARM share of activity slipped only modestly (to 8.4% from 8.5% the previous week), but the rationale is obvious. The average rate for a 5/1 ARM jumped to 6.23% from 5.82%. That leaves considerably less of a rate advantage compared with the 30-year fixed mortgage.

The average contract rate for a 30-year fixed mortgage increased to 6.97% from 6.85%, while the rate for jumbo 30-year loans jumped to 7.03% from 6.74%. The 15-year fixed rate increased to 6.30% from 6.17%, while the 5/1 ARM rate climbed to 6.23% from 5.82%.

Mortgage Rate Summary:

  • 30yr Fixed: 6.97% (from 6.85%) | Points: 0.72 (from 0.67)
  • 15yr Fixed: 6.30% (from 6.17%) | Points: 0.98 (from 0.93)
  • Jumbo 30yr: 7.03% (from 6.74%) | Points: 0.59 (from 0.63)
  • FHA: 6.62% (from 6.53%) | Points: 0.85 (from 0.86)
  • 5/1 ARM: 6.23% (from 5.82%) | Points: 0.99 (from 0.84)