In its weekly applications survey, the Mortgage Bankers Association reported a 3.1% increase in mortgage applications week-over-week. Both purchases and refinances saw upticks, with the refinance index up 5% from the week before and the seasonally adjusted purchase index up 1%. Both purchases and refinancing were up 18% from a year ago.

Joel Kan, MBA's vice president and deputy chief economist, pointed to three straight weeks of falling interest rates as a main driver of the uptick in applications.

"Borrowers sought to take advantage of these lower rates, as both purchase and refinance applications increased over the week," he said in a statement. "Purchase activity continued to lead 2024's pace, as increasing for-sale inventory of homes has been supporting homebuying, but on the other hand recent weakness in the economic environment has deterred some prospective homebuyers."

Refinancing made up 41.5% of total mortgage applications, up from 40.7% last week, the highest share since April. As rates soften, homeowners who find themselves locked into high mortgage rates – some at 7% or higher – may be looking to seize the moment to get some relief.

The breakdown of government-backed loans remained mostly unchanged from the week before. FHA applications made up 18.8% of all mortgages while Department of Veterans Affairs-backed mortgages accounted for 12.2%, a notable drop from last week's 13.3%. Applications for mortgages backed by the U.S. Department of Agriculture decreased, constituting 0.5% of the total.