Mortgage Refinance Applications Are Soaring As Rates Drop

Group 1 - Current homeowners are benefiting from the anticipated Fed rate cut, leading to a 58% increase in refinance applications in the last week and a 70% increase compared to the same week last year [1][8] - There is a notable rise in demand for adjustable-rate mortgages (ARMs), with the share of refinancing activity tied to ARMs reaching 12.9%, the highest since 2008 [2] - The surge in refinancing demand is driven by a significant drop in home borrowing costs, with the 10-year US Treasury yield decreasing to around 4.02% from a peak of 4.8% in early 2025, influencing mortgage rates [3] Group 2 - The 30-year fixed mortgage rate fell by 15 basis points to approximately 6.35%, marking the largest weekly drop in a year, while the 5/1-year adjustable mortgage rate decreased to 5.7% [4] - Overall mortgage activity is increasing, with total applications up 9.2% in the week ending September 5, indicating strong borrower demand since 2022 [8] - The rising activity suggests a positive outlook for the US housing market, which has been stagnant due to high borrowing costs, with expectations of mortgage rates dropping to around 6.25% by year-end as the Fed resumes its easing cycle [9]