The U.S. mortgage market just had its busiest week in years, fueled by falling rates and renewed borrower demand. Both homeowners and buyers are jumping back in, making it the strongest week since 2022 for mortgage applications, according to reporting from Homes.com.

Mortgage Rates Hit 11-Month Low

After months of stubbornly high rates, the average 30-year fixed mortgage dropped to 6.29% in daily tracking, with the weekly average sitting at 6.56%. This marked the biggest one-day decline since last summer and immediately sparked a rush of applications.

Demand Surges Across the Board

Data from the Mortgage Bankers Association (MBA), reported by Homes.com, shows mortgage loan application volume rose 9.2% in the week ending September 5 (adjusted for the Labor Day holiday).

• Refinance demand: Up 12% week-over-week and 34% higher than last year

• Purchase demand: Up 7% week-over-week, hitting the highest level since July

Joel Kan, MBA’s deputy chief economist, noted that purchase applications are running 20% ahead of last year’s pace, while refinances made up nearly half (49%) of all mortgage activity last week.

Refinancing Comes Roaring Back

The drop in rates was especially appealing to homeowners with larger mortgages. Many seized the opportunity to refinance at a lower rate, leading to a notable increase in the average loan size for refinances.

As Steve Trautwein of Intercoastal Mortgage told Homes.com: “My phone has been ringing off the hook. It’s going to be a very busy weekend.”

Adjustable-Rate Mortgages Gain Popularity

Alongside fixed-rate loans, adjustable-rate mortgages (ARMs) saw a boost in applications. Since ARMs typically start with lower rates than fixed mortgages, they can offer an affordable entry point for buyers—especially in a higher-rate environment.

However, ARMs carry more risk since payments adjust after the initial fixed period. For some borrowers, this trade-off is worth the initial savings.

The Bigger Picture: A Busy Market, But Risks Remain

While falling rates have brought new life to the mortgage market, the wider economy tells a more cautious story. The Bureau of Labor Statistics recently revised jobs data, showing the labor market in 2025 is weaker than expected.

As mortgage expert Melissa Cohn explained: “Lower rates could be the new normal, but that comes at the risk of a weakening economy. And no matter how low mortgage rates go, it isn’t easy to get a loan if you don’t have stable employment.”

Takeaway

For now, lower mortgage rates are giving both buyers and homeowners a much-needed break—and lenders are seeing a welcome surge in activity. But with economic uncertainty looming, the window of opportunity may be narrow.

If you’ve been waiting to refinance or buy, now might be the time to explore your options.