M
ortgage applications saw a welcome increase last week, marking the first rise in four weeks. The uptick is attributed to declining interest rates, which have been trending downward as economic data suggests a softening economy.

    According to the Mortgage Bankers Association's Market Composite Index, mortgage application volume rose 3.1% on a seasonally adjusted basis and 3% unadjusted from the previous week. Refinancing activity led the gains, with the Refinance Index jumping 5% week-over-week and 18% from the same period last year.

    The Purchase Index also saw an increase of 2% on a seasonally adjusted basis and 1% unadjusted, up 18% year-over-year. This suggests that for-sale housing inventory is supporting home buying activity.

    "Mortgage rates moved lower last week due to a drop in Treasury yields as fresh economic data pointed to weakening momentum," said Joel Kan, MBA's deputy chief economist. "This prompted an uptick in both purchase and refinance applications as borrowers took advantage of more favorable rate conditions."

    The average 30-year fixed mortgage rate fell to 6.77%, the lowest level in three weeks, while jumbo loans saw a similar trend with rates easing to 6.65%. Rates for FHA-backed mortgages dropped to 6.47% and 15-year fixed rates fell to 6.03%.

    The refinance share of overall mortgage activity increased to 41.5%, its highest level since April, while the ARM share ticked higher to 8.5%. Kan noted that refinance applications posted their strongest pace in a month after falling for three consecutive weeks.

    Among loan programs, FHA-backed loans edged down to 18.5% from 18.8%, while VA-guaranteed loans rose to 13.3% from 12.2%. The latest data suggests that modest rate relief and improving inventory may offer near-term support in the housing market, despite ongoing headwinds.