Mortgage Demand Shows Mixed Signals, But Falling Rates Could Boost Refinance Activity Next Week

Mortgage application activity remained largely flat last week, with only a slight dip in overall volume. According to the latest Mortgage Bankers Association (MBA) weekly survey for the week ending August 22, 2025, the seasonally adjusted Composite Index fell by just 0.5%.

Joel Kan, MBA’s Vice President and Deputy Chief Economist, highlighted the subtle shifts in borrower behavior: “Mortgage rates inched slightly higher for the second consecutive week, with the 30-year fixed-rate climbing to 6.69%. While the increase was minor, it was enough to cause a modest pullback in refinance applications. Meanwhile, purchase activity had its strongest week in over a month, rising 2%, and the average loan size jumped to $433,400 the highest in two months.”

Refinance Activity

The Refinance Index slipped 4% from the prior week, but remains a full 19% above last year’s level. This shows that despite temporary fluctuations, refinancing remains attractive to borrowers, particularly as mortgage rates settle near their lowest levels for 2025. The drop last week appears to be more of a short-term pause than a reversal of demand trends.

Purchase Activity

On the purchase side, the seasonally adjusted index rose 2% and continues to outperform last year, currently running about 25% higher than the same week in 2024. This increase reflects not only stable buyer interest but also a small seasonal boost as inventory gradually improves and the pace of home-price growth slows. Lower price growth is easing affordability pressures, encouraging more buyers to enter the market.

Market Share Breakdown

• Refinance share of total applications: 45.3%
• Adjustable-rate mortgages (ARMs): 8.4%
• FHA loans: 19.1% (unchanged)
• VA loans: 13.3% (slightly down)

Current Mortgage Rates

• 30-year fixed: 6.69% (up from 6.68%) | Points: 0.60 (unchanged)
• 15-year fixed: 6.03% (up from 5.96%) | Points: 0.77 (up from 0.70)
• Jumbo 30-year: 6.67% (up from 6.64%) | Points: 0.44 (down from 0.60)
• FHA 30-year: 6.35% (down from 6.39%) | Points: 0.80 (up from 0.66)
• 5/1 ARM: 5.94% (down from 6.01%) | Points: 0.68 (up from 0.63)

Looking Ahead

With rates hitting new lows for 2025 this week, refinance activity is likely to rebound next week. Borrowers who had been waiting for a more favorable rate environment may be prompted to lock in loans, potentially creating a surge in refi applications. Purchase demand, while less sensitive to short-term rate changes, is benefiting from the combined effect of improving inventory and slower price appreciation, which is enhancing affordability for prospective buyers.

In summary, while last week’s mortgage activity was relatively quiet, the recent downward movement in rates sets the stage for a possible uptick in refinancing and sustained buyer interest in home purchases. Borrowers and lenders alike will be watching closely for next week’s trends as the market responds to these favorable conditions. For direct financing consultations or mortgage options for you visit 👉 Nadlan Capital Group.