The contract rate on a 30-year mortgage declined 10 basis points to 6.67% in the week ended Aug. 8, according to Mortgage Bankers Association data released Wednesday.

Approximately 60% of economists surveyed by Wolters Kluwer believe the Federal Open Market Committee will act at its next meeting with a 25 basis point cut.

Data-Free Rally Day

Wednesday represented this week’s lull in terms of scheduled market movers on the calendar. Overnight gains game courtesy of strength in EU bonds as well as burgeoning expectations for a Fed rate cut at the September meeting (now roughly 100% priced-in according to Fed Funds Futures). There were no new reasons for changes in Fed Funds Futures beyond yesterday’s CPI release, so chalk it up to general tradeflow momentum. Thursday brings PPI which, while not as big a deal as CPI, can sometimes cause a noticeable reaction due to its impact on the broader PCE price index.

Econ Data / Events

MBA refi index

956.2 vs 777.4 prev

MBA Purchase Index

160.2 vs 158.0 prev

Market Movement Recap

09:14 AM Steadily stronger overnight with additional gains this morning.  MBS up 6 ticks (.19) and 10yr down 4.2bps at 4.248

01:01 PM Calmly holding gains. 10yr down 5.4bps at 4.234 and MBS up nearly a quarter point.

03:08 PM 10yr down 5bps at 4.239. MBS up 7 ticks (.22)

October 3rd, 2024 continues to be the day to beat when it comes to mortgage rates hanging out at 10 month lows. Today’s top tier 30yr fixed rate matched October 4th levels for the first time since then, just barely edging out last week’s lowest levels. Hitting the next milestone will be a much bigger challenge.  The gap between October 3rd and 4th was about as big as they come with a single day move of more than 0.25%.  To put that in perspective, the 5 months leading up to August didn’t see a range much larger than 0.25%. [thirtyyearmortgagerates] But this comparison to a past milestone is much ado about nothing. Rates are as low as they’ve been in a long time and refi demand was already surging before the latest drop.  If economic data weakens and if inflation stays manageable, we could see further improvement, and every little bit helps. As for today’s specific improvement, it wasn’t the product of any major new development. Markets continued a delayed reaction to yesterday’s Consumer Price Index (inflation data).  Notably, rates moved lower in concert with Fed rate cut expectations.  For all the time we spend pushing back on the belief that the Fed dictates mortgage rates, this is the one time that there’s a sort of exception.   Specifically, mortgage rates do indeed tend to move the same direction as Fed rate EXPECTATIONS .  This is mostly because the two share many common motivations and NOT because mortgage rates are waiting for a change in the actual Fed Funds Rate.  A prime example was seen in late 2024 when mortgage rates hit long term lows only to begin moving higher when the Fed finally cut rates.

I received this note from Dallas. “I like ‘dillos, but I don’t support giving them guns because… I would never armadillo.” Speaking of which, Texas is slowing down: The Dallas Fed tells us, “Texas’ overall pace of economic growth, much of it due to jobs in innovation, is trending lower, with payroll employment declining in June, a marked turn from robust job gains earlier in 2025.” Texas lenders, or at least banks and credit unions, do their share of adjustable-rate mortgages, so may be okay with lower short-term rates via the Fed and stable long-term rates. Last week’s MBA application data reflects increasing ARMs: “Given the relative attractiveness of ARM rates compared to fixed rate loans, ARM applications increased 25 percent to their highest level since 2022, and the ARM share of all applications was almost 10 percent. (The refinance share of mortgage activity increased to 46.5 percent of total applications from 41.5 percent the previous week. The ARM share of activity increased to 9.6 percent of total applications.) (Today’s podcast can be found here and this week’s is sponsored by ICE. By seamlessly integrating best-in-class solutions, ICE optimizes every stage of the loan life cycle, setting the standard for innovation, artificial intelligence, efficiency, and scalability, and defining the future of homeownership. Today’s has interview with HomeLight’s Sumant Sridharan on the latest surveyed trends among real estate agents a year after the NAR settlement and how technology is shaping their interactions with both lenders and borrowers.)

Mortgage application activity surged last week as sharply lower mortgage rates boosted refinance demand and gave purchase applications a modest lift. The Mortgage Bankers Association’s weekly survey showed a 10.9% increase in the seasonally adjusted Composite Index for the week ending August 8, 2025. “Mortgage rates fell to their lowest level since January, leading to a solid rebound in application activity,” said Joel Kan, MBA’s Vice President and Deputy Chief Economist. “The 30-year fixed rate declined to 6.67%, the third straight weekly drop, and that pulled refinance applications to their highest level since early 2023. Purchase activity also picked up, driven by gains in both conventional and government segments.” The Refinance Index jumped 23% week-over-week and is now roughly 55% higher than the same week a year ago.  The Purchase Index rose 1.4% from the prior week and is running about 18% ahead of last year’s pace. Mortgage Rate Summary:
30yr Fixed: 6.67% (from 6.77%) | Points: 0.64 (up from 0.59)
15yr Fixed: 5.93% (from 6.03%) | Points: 0.63 (down from 0.66)
Jumbo 30yr: 6.70% (from 6.65%) | Points: 0.56 (down from 0.59)
FHA: 6.40% (from 6.47%) | Points: 0.77 (down from 0.81)
5/1 ARM: 5.80% (from 6.06%) | Points: 0.67 (up from 0.49)

Bonds rallied overnight, largely in concert with lower EU yields. Stable inflation in Germany and lower oil prices helped. But there was also a tailwind from Fed Funds Futures which saw a further increase in the odds of a rate cut at the September meeting. While this is undoubtedly a better way to start the day compared to a sea of red on trading screens, and while a 4+ bp improvement in 10s is more than just an incidental, inconsequential rally in day over day terms, the bigger picture is actually quite boring.  It’s not an oversimplification to say that yields were orbiting 4.40% before the last jobs report and then rallied down to a 4.2-4.3 range afterward.  CPI did no harm, so we remain in that range as we wait to see whether the next jobs report will justify only the 25bp cut currently expected by the market or whether it’s weak enough to entertain a 50bp cut (unlikely for now, but a preponderance of weak data in the interim could change things).

Core CPI, which excludes food and energy, rose to 3.1%, up from 2.9% in June.

Whittemore and his team are working to help the company handle both growth and diverse loan types, including non-QM, RPLs and NPLs.

July’s growth in products correspond with a noticeable rise in new applications for adjustable-rate mortgages as borrowers respond to recent rate movements.