“Mortgage demand has shifted heavily toward refinancing as interest rates dropped for the fifth consecutive week. Total mortgage applications rose 1.6% last week, according to the Mortgage Bankers Association’s adjusted index.

The average interest rate for 30-year fixed-rate mortgages with conforming loan balances decreased slightly to 6.43%, with points increasing to 0.56 for loans with a 20% down payment. This rate remains 78 basis points higher than last year.

Refinance applications fell 0.3% for the week but were 94% higher than a year ago, reflecting strong annual growth despite a low starting point. According to MBA economist Joel Kan, the refinance share averaged nearly 46% in August, the highest since March 2022.

Purchase mortgage applications rose 3% for the week but remain 4% lower year-over-year. Slow home sales and high prices have limited buyer activity despite the recent rate drops. Government loans led the slight increase in demand, driven by FHA and VA options.”