Loan applications increased last week, according to the latest numbers from the Mortgage Bankers Association. The average interest rate on a 30-year fixed rate loan is 6.16%.
Mortgage rates have not yet returned to pandemic-era lows, but new numbers showing increased demand for loans may give real estate experts cautious optimism this week.
The numbers, released Wednesday, come from the Mortgage Bankers Association’s Market Composite Index, which measures the number of mortgage applications. For the week ending January 16, the index rose a seasonally adjusted 14.1% from the previous week. On an unadjusted basis, the index rose 17%.
In other words, more people applied for loans last week.
The MBA attributed the increase in activity to an improvement in rates, which have fallen to their lowest level in more than a year.
“Last week saw another strong week for refinance applications, with mortgage rates falling further, to the most active level since September 2025,” MBA Deputy Chief Economist and Vice Chancellor Joel Kang said in a report on the new numbers. “30-year fixed interest rates averaged 6.16%, the lowest interest rate since September 2024.”
The interest rate of 6.16 that Prime Minister Suga mentioned is the average for a 30-year fixed rate conforming loan, down from 6.18 a week ago.
“These lower interest rates led to increased refinance activity from traditional and VA refinance borrowers, which increased by 29% and 26%, respectively,” Kang said in the report.
Suga added, “Refinance applications accounted for more than 60% of the number of applications, and the average loan amount also increased.”
The report specifically noted that refinances accounted for 61.9% of total loan applications last week. This was up from 60.2% the previous week.
Refinance activity is particularly noteworthy as many homeowners secured unusually low interest rates during the coronavirus pandemic. Experts suggest these homeowners may feel “trapped” by current interest rates. That means they may be unwilling or unable to sell or refinance, potentially ending up taking out a larger, more expensive loan. As a result, this virtual mortgage lock is being blamed for tying up inventory and leaving many would-be home sellers on the sidelines.
However, the increase in the number of refinance applications suggests that more homeowners are in a position to exchange their loans for current interest rates.
All of this is good news for real estate professionals and their clients who are struggling with the downturn in the housing market. The slowdown began in 2022 with a sharp rise in mortgage rates. And while today’s interest rates are still well above pre-slowdown levels, an increase in loan applications at least raises the prospect of improvement.
Email Jim Dalrymple II
