Mortgage applications climb as 30-year fixed rate falls below 7%

Falling rates push refinance applications to their highest level since December

Mortgage applications climb as 30-year fixed rate falls below 7%

Mortgage applications increased last week as borrowing costs eased, with the average rate for a 30-year fixed-rate mortgage dipping below 7% for the first time in six weeks.

Overall mortgage application volume rose by 2.2% on a seasonally adjusted basis, the Mortgage Bankers Association (MBA) reported based on its weekly survey for the week ending January 31. On an unadjusted basis, mortgage applications surged 19% from the prior week, reflecting a rebound after the Martin Luther King holiday adjustment.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($766,550 or less) dropped to 6.97% from 7.02%.

“Mortgage rates moved lower last week, consistent with lower Treasury yields following the FOMC meeting and a volatile week for the stock market. The 30-year fixed rate declined to its lowest level in six weeks at 6.97%,” MBA deputy chief economist Joel Kan said in the report. “Mortgage applications responded to these lower rates and were up for the week overall.”

With mortgage rates falling, homeowners took advantage of refinancing opportunities. The Refinance Index jumped 12% from the previous week, its strongest week since December 2024. Compared to the same period last year, refinance applications were 17% higher.

Refinance activity now accounts for 39.0% of total mortgage applications, up from 37.1% the previous week.

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While refinances surged, purchase applications saw a setback, declining 4% on a seasonally adjusted basis. The unadjusted Purchase Index, however, rose 15% compared to the previous week and was 0.2% higher than the same period last year.

“Purchase activity had a tougher week, with declines across all loan types,” said Kan. “The average loan size for a purchase loan has increased since the start of the year and continued that trend last week with weaker government purchase activity, which reached $447,300, the highest level since October 2024.”

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