M
ortgage applications have surged to their highest levels since July 2022, driven by homeowners seeking to refinance as interest rates decline. According to the Mortgage Bankers Association (MBA), applications for refinancing or purchasing a home rose 11% in the week ending September 20 compared to the previous week. Refinancing applications jumped 20% during this period, with nearly 56% of all applications being for refinancing as the typical summer homebuying season comes to a close.

    The average rate on a 30-year fixed mortgage has fallen significantly over the summer, dropping to 6.09% by September 19, down from over a percentage point from last year's rates. As a result, refinancing applications are up 175% compared to this time last year. This uptick in mortgage activity follows a slow summer homebuying season, where many potential buyers stayed on the sidelines due to limited inventory and record-high prices.

    Joel Kan, MBA's vice president and deputy chief economist, notes that lower interest rates have led to sharp increases in both conventional and government refinance applications. With interest rates continuing to drop, it remains to be seen how this will impact the mortgage market going forward.