The September drop in mortgage rates is sparking the biggest boom in refinancings since the pandemic. Mortgage-refinancing applications have surged above the decade average, despite that period including the record-breaking refi boom of 2020-21 when rates fell to all-time lows. Purchase-loan demand has also rebounded to its best for this time of year since 2022, yet remains well below pre-pandemic levels.
Can we ask the US House and Senate if they will ever return US Federal government spending to pre-Covid levels? Both US Federal government spending and public debt are up 56% since the Covid outbreak in 2020.
The answer is no. Politicians thrive on Federal spending.
Mortgage applications decreased 4.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending October 3, 2025.
The Market Composite Index, a measure of mortgage loan application volume, decreased 4.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 5 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 1 percent compared with the previous week and was 14 percent higher than the same week one year ago.
The Refinance Index decreased 8 percent from the previous week and was 18 percent higher than the same week one year ago.
With mortgage rates on fixed-rate loans little changed last week, refinance application activity generally declined, with the exception of a modest increase for FHA refinance applications.
Mortgage demand dwindled since Covid and Biden/Powell and hasn’t recovered.
Mortgage applications decreased 12.7 percent from one week earlier, according to data from the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending September 26, 2025.
The Market Composite Index, a measure of mortgage loan application volume, decreased 12.7 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased 13 percent compared with the previous week. The seasonally adjusted Purchase Index decreased 1 percent from one week earlier. The unadjusted Purchase Index decreased 2 percent compared with the previous week and was 16 percent higher than the same week one year ago.
The Refinance Index decreased 21 percent from the previous week and was 16 percent higher than the same week one year ago.
Mortgage rates increased to its highest level in three weeks as Treasury yields pushed higher on recent, stronger than expected economic data. After the burst in refinancing activity over the past month, this reversal in mortgage rates led to a sizeable drop in refinance applications, consistent with the view that refinance opportunities this year will be short-lived.
Home prices across the top 20 cities in the US fell by 0.07% MoM (less than the 0.2% decline expected) – the fifth straight monthly drop in prices. This pulled the YoY price appreciation down to 1.82%, the lowest since July 2023.
The U.S. housing market continues its dramatic shake-up, with 7 cities seeing outright price declines YoY, lead by Tampa FL.
Denver -0.6%
San Diego -0.7%
Phoenix -0.9%
Dallas -1.3%
Miami -1.3%
San Francisco -1.9%
Tampa -2.8%
On the up side, Attom lists the following big gainers in price.
#10 – Wichita County, Texas
YOY Percentage Change in Median Home Price: 21.3%
Q3 2005 Median Sales Price: $207,280
#9 – Whitfield County, Georgia
YOY Percentage Change in Median Home Price: 21.5%
Q3 2005 Median Sales Price: $279,500
#8 – Tompkins County, New York
YOY Percentage Change in Median Home Price: 22.1%
Q3 2005 Median Sales Price: $420,000
#7 – Fayette County, Pennsylvania
YOY Percentage Change in Median Home Price: 22.3%
Q3 2005 Median Sales Price: $165,000
#6 – Schuylkill County, Pennsylvania
YOY Percentage Change in Median Home Price: 23.1%
Q3 2005 Median Sales Price: $139,500
#5 – Jackson County, Michigan
YOY Percentage Change in Median Home Price: 23.2%
Q3 2005 Median Sales Price: $232,920
#4 – Kankakee County, Illinois
YOY Percentage Change in Median Home Price: 24.6%
Q3 2005 Median Sales Price: $233,750
#3 – Tom Green County, Texas
YOY Percentage Change in Median Home Price: 26.8%
Q3 2005 Median Sales Price: $283,231
#2 – Saint Louis County, Missouri
YOY Percentage Change in Median Home Price: 28.2%
Q3 2005 Median Sales Price: $312,500
#1 – Jasper County, Missouri
YOY Percentage Change in Median Home Price: 32.1%
Q3 2005 Median Sales Price: $241,894
A simple model of national home prices? Try Fed money printing.
August data for the US housing market has been ‘mixed’ to say the least with a surge in new home sales (thanks to a massive rise in incentives from homebuilders) and a small decline (near multi-year lows), leaving this morning’s pending home sales data as the tie-breaker (with expectations of an ‘unch’ shift MoM).
It appears the drop in mortgage rates is driving some purchase activity as pending home sales soared 4.0% MoM in August – the most since March – dragging sales up 0.5% YoY.
Mortgage rates are falling, helping existing home sales. Note that the 30-year mortgage rate peaked at 18.63% in 1981.
The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the third quarter of 2025 is 3.9 percent on September 26, up from 3.3 percent on September 17. After recent releases from the US Census Bureau, the US Bureau of Economic Analysis, and the National Association of Realtors, a decrease in the nowcast of third-quarter real gross private domestic investment growth from 6.4 percent to 4.1 percent was more than offset by increases in the nowcast of third-quarter real personal consumption expenditures growth from 2.7 percent to 3.4 percent and the nowcast of the contribution of net exports to third-quarter real GDP growth from 0.08 percentage points to 0.58 percentage points.
Existing home sales helped drive higher GDP growth.
August represents a massive switch from 3 years ago when there were nearly 40% more home buyers and sellers in the US housing market. There are now 35.2% MORE home sellers than buyers!
Confounded Interest - Anthony B. Sanders 
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