Mortgage Applications Today: Home Loan Demand Inches Up for Second Week as 30-Year Rate Falls to Lowest Level Since 2022

Home loan demand increased for the second consecutive week. Mortgage applications rose 0.4% from the week prior for the week ending Feb. 20, according to the Mortgage Bankers Association.

The Market Composite Index, a measure of mortgage loan application volume, increased 0.4% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index increased 2% compared with the previous week.

The Refinance Index increased 4% from the previous week and was 150% higher than the same week one year ago. The seasonally adjusted Purchase Index decreased 5% from one week earlier. The unadjusted Purchase Index decreased 1% compared with the previous week and was 12% higher than the same week one year ago.

Mortgage interest rates dropped to its lowest level since September 2022. The average rate on a 30-year fixed home loan fell to 6.01% for the week ending Feb. 19, according to Freddie Mac. That's down from 6.09% the week prior.

"Mortgage rates followed Treasury yields lower last week, with the 30-year fixed rate declining to 6.09 percent – its lowest level since September 2022. The decrease in rates was enough to drive a 5 percent increase in conventional refinance applications and a 26 percent increase in VA refinances,” said Joel Kan, MBA’s vice president and deputy chief economist.

“Purchase applications were down over the week but were 12 percent higher than a year ago, as the combination of lower rates and improving affordability conditions continue to support stronger demand than last year."

The refinance share of mortgage activity increased to 58.6% of total applications from 57.4% the week prior. The adjustable-rate mortgage (ARM) share of activity remained unchanged at 8.2% of total applications.

The Federal Housing Administration (FHA) share of total applications decreased to 16.1% from 18.4% the week prior. Veterans Affairs share of total applications increased to 18.7% from 16.5% the week prior. The USDA share of total applications remained unchanged at 0.4% from the week prior.

"The ARM share stayed above 8 percent, as ARM rates remained more than 80 basis points below conforming fixed rates. This is giving payment-sensitive borrowers or those seeking larger loans an incentive to choose this product offering," Kan said.

Contract rates

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($832,750 or less) decreased to 6.09% from 6.17%, with points decreasing to 0.53 from 0.56 (including the origination fee) for 80% loan-to-value ratio (LTV) loans. The effective rate decreased from last week.

The average contract interest rate for 30-year fixed-rate mortgages with jumbo loan balances (greater than $832,750) decreased to 6.20% from 6.21%, with points increasing to 0.42 from 0.27 (including the origination fee) for 80% LTV loans. The effective rate increased from last week.  

The average contract interest rate for 30-year fixed-rate mortgages backed by the FHA decreased to 5.97% from 5.99%, with points remaining unchanged at 0.65 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The average contract interest rate for 15-year fixed-rate mortgages decreased to 5.48% from 5.50%, with points decreasing to 0.70 from 0.73 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

The average contract interest rate for 5/1 ARMs decreased to 5.23% from 5.29%, with points decreasing to 0.41 from 0.62 (including the origination fee) for 80% LTV loans. The effective rate decreased from last week.

Mortgage rates calculated

Mortgage rates are calculated by various factors in the economy, and the length of your loan will also figure into the mortgage rate you qualify for.

The 30-year mortgage rate is tied to the yield of the 10-year Treasury note, according to Fannie Mae. As the yield on the 10-year Treasury note moves, mortgage rates follow.

The yield on the 10-year Treasury note is determined by expectations for shorter-term interest rates in the economy over the duration of a bond, plus a term premium.