Market Update: Rates Drop to Fresh 10-Month Lows; Refinance Demand Surges to 2-Year Highs

Blog posted On August 15, 2025

Your Friday Market Update is here! A lot happened this week, so we’re back at it again to catch you up and keep you in the loop about all things mortgage. Let’s dive in.

Rates dropped to new 2025 lows

Mortgage rates trended lower again this week, hitting a fresh 10-month low. Many homeowners are liking what they’re seeing and jumping into the market for a refinance.

Mortgage demand is surging

According to the Mortgage Bankers Association (MBA) survey from the week ending 8/8:

• Total mortgage applications: +10.9% from the previous week
• Purchase applications: +1% from the previous week
• Refinance applications: +23% from the previous week, bringing them to their highest level since 2023. The majority of refinances have been VA and Conventional Loans
• Adjustable-rate mortgage (ARM) applications: +25% from the previous week, bringing them to their highest level since 2022

 Why are rates falling?

? Labor market is softening:  A couple of weeks ago, the Labor Department released a collection of employment reports that showed rising unemployment, fewer job hirings, and fewer job openings. A weak labor market points to a weak economy, which causes lower rates.

? Inflation is holding steady: Though inflation is a less important statistic than jobs data right now, it’s still important that it remains lower. If it holds, the Fed will be more inclined to lower the benchmark rate

? Fed predicted to cut rates: There’s been a lot of pressure on the Fed to cut rates, and many think that it will at the next meeting in September. Though this doesn’t directly set mortgage rates, it can influence the bond market, which can influence mortgage rate swings. However, the bond market tends to predict the fed’s move and adjust accordingly before it meets vs. react after it announces the decision.

?? Coming up next week

??? Builder confidence (NAHB) → How optimistic are builders about the state of the housing market?

??Housing starts & permits → Are more homes breaking ground?

?? Existing home sales → Are lower rates boosting selling/buying activity?

? Going forward: Why this matters for you
If rates keep inching toward 6%, we could see a noticeable boost in housing activity—more buyers in the market, more sellers listing, and potentially more homes being built.

• For homeowners, this could mean refinancing into a lower payment or tapping equity for big expenses without leaning on high-interest credit cards.
• For buyers, lower rates mean more buying power—you might qualify for a home that was out of reach just a few months ago.

Bottom line: If you’ve been waiting for the right moment to buy or refi, the market’s starting to give you that window. It may not stay open for long. Reach out if you’d like to talk more or get preapproved to make your move.

Sources: Bloomberg, Mortgage Bankers Association, Mortgage News Daily