Refi applications soar as homeowners seize on lower rates

Homeowners who were locked into high interest rates have been eager for them to dip so they can refinance. Last week, many saw their chance and took it.

Mortgage applications rose 2.7% for the week ending June 27, according to the Mortgage Bankers Association's Weekly Applications Survey, driven mostly by refinancing. Refinance applications were up 7% week-over-week and 40% from the same point last year. In contrast, purchase applications were essentially unchanged, moving up just 0.1% on a seasonally adjusted basis, though purchases were still up 16% from a year ago.

"Mortgage rates were lower across all loan types last week, with the 30-year fixed rate declining to its lowest level since April at 6.79 percent," said Joel Kan, MBA's vice president and deputy chief economist, in a statement. "This decline prompted an increase in refinance applications, driven by a 10 percent increase in conventional applications and a 22 percent increase in VA refinance applications."

Kan added that homeowners with larger mortgages are often the most eager to refinance since they have the most to gain when interest rates drop.

"As borrowers with larger loans tend to be more sensitive to rate changes, the average loan size for a refinance application increased to $313,700 after averaging less than $300,000 for the past six weeks," he said.

Refinance applications made up 40.1% of all applications, an increase from last week's 38.4%, underscoring the excitement many homeowners seemed to feel.

Many homeowners who bought their homes when mortgage rates were 7% or higher have been looking to take advantage of cooling mortgage rates as an opportunity to refinance. Rates have mostly hovered between 6.8% and 7% in the first half of 2025, but some market watchers expect them to begin falling in the coming months, meaning that millions of homeowners could potentially look to refinance. 

Among purchase applications, conventional loans saw a slight uptick, making up 69.3% of applications compared to 68.5% the week before. FHA loans, which had seen a bump in interest last week, dropped to 18.2% of total applications. The percentage of VA and USDA loan applications remained mostly unchanged at 12% and 0.5%, respectively.

FHA loans, which are popular with first-time buyers, are seeing increasing interest, with applications up 71.8% from a year ago, according to the MBA. Recently announced changes to the program could make the loans more appealing to would-be homebuyers, though it could also bring risks considering the recent rise in delinquency rates among borrowers in the program.

Adjustable-rate mortgages made up 7.8% of all mortgages, up from the previous week's 6.9%. Interest rates for 5/1 ARMs averaged 5.99%, down from 6.16% the week before.

Interest rates for other loans also dropped. The 30-year fixed-rate for jumbo loans stood at 6.79% while the rate for FHA-backed loans fell 6 basis points to 6.53%. The 15-year fixed-rate also fell slightly to 6.11%.