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- Purchase mortgage applications were up 23% year-over-year last week as 30-year fixed-rate mortgages rates dropped to the lowest since October 2024.
- Optimal Blue data showed mortgage rates dropped to a new 2025 low of 6.27% Monday after weak August job growth and inflation data suggested the Fed may cut interest rates soon.
- Economists caution that recent Producer Price Index declines reflect only part of inflation trends; the upcoming Consumer Price Index release on Sept. 11 will provide further clarity on inflation impacts.
An AI tool created this summary, which was based on the text of the article and checked by an editor.
Homebuyer demand for purchase mortgages surged last week to the highest level since July as mortgage rates descended toward a new 2025 low, according to the Mortgage Bankers Association.
The MBA’s Weekly Mortgage Applications Survey showed purchase loan requests were up a seasonally adjusted 7 percent last week compared to the week before, and 23 percent from a year ago.
Joel Kan
“Mortgage rates declined for the second consecutive week as Treasury yields moved lower on data indicating that the labor market is weakening,” MBA Deputy Chief Economist Joel Kan said, in a statement. “The 30-year fixed rate decreased to 6.49 percent, down 20 basis points over the past two weeks to the lowest since October 2024.”
Requests to refinance were also up 12 percent week over week and 34 percent from a year ago, helping create the strongest overall demand for mortgages from homebuyers and existing homeowners combined since 2022, Kan said.
Purchase loan demand near 2025 high
Source: MBA Weekly Applications Survey.
At 169.1, the MBA’s seasonally adjusted purchase loan index was inching back up toward a 2025 high of 180.9 registered during week ending July 4 180.9, and up 32 percent from this year’s low of 127.7, registered in January.
The pickup in refi applications was even more dramatic.
“The holiday-adjusted refinance index had its strongest week in a year and the average loan size for refinances also increased significantly, since borrowers with large loans are more sensitive to bigger rate moves,” Kan said. “Refinance applications accounted for almost 49 percent of all applications last week.”
Mortgage rates hit new 2025 low
Rates on 30-year fixed-rate mortgages tracked by Optimal Blue fell to a new 2025 low of 6.27 percent Monday following a jobs report Friday showing employers added just 22,000 jobs to U.S. payrolls in August.
While Optimal Blue data showed mortgage rates rebounding slightly on Tuesday, they were headed down again on Wednesday after new inflation data bolstered expectations that the Federal Reserve will initiate a series of rate cuts on Sept. 17.
The Producer Price Index (PPI) showed that so-called “final demand” prices fell by 0.1 percent from July to August, when forecasters had expected them to rise by 0.3 percent.
President Trump, who’s been pressuring the Federal Reserve to lower rates, declared on Truth Social that the report means there is “No inflation” and that Fed Chair Jerome Powell “must lower the RATE, BIG, right now.”
But economists say the PPI report paints only one piece of the inflation picture.
While producer prices for goods continue to rise steadily in response to tariffs, the latest numbers show retailers and wholesalers are cutting their profit margins, Pantheon Macroeconomics Chief U.S. Economist Samuel Tombs said in a note to clients.
“Commodity prices, however, are flat, shipping costs have returned to their lowest levels since their post-pandemic surge, and the dollar has held its value against other currencies since June,” Tombs said.
That means “core goods PPI inflation” — which excludes volatile food and energy prices — “should ease after producers have finished passing on tariff costs in a few months time,” Tombs said.
The picture will become more clear when the Consumer Price Index (CPI) for August is released on Thursday, Sept. 11.
The PPI and CPI are components of the Fed’s preferred gauge of inflation, the Personal Consumption Expenditures (PCE) price index.
The latest PCE price index data showed the price of goods and services was up 2.6 percent from a year ago in July. That’s up from 2.2 percent in April and the farthest from the Fed’s 2 percent target since February, when the PCE price index was up 2.7 percent from a year ago.
The PCE price index for August is set for release on Sept. 26.
Futures markets tracked by the CME FedWatch tool show investors on Wednesday saw a 70 percent chance the Fed will cut rates by at least 3/4 of a percentage point at its final three meetings of the year, up from 43 percent on Sept. 3.
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