Rate Drop Triggers Refi Surge

Mortgage application activity rebounded sharply last week as falling interest rates reignited refinance demand and kept homebuyers active, according to the Mortgage Bankers Association’s (MBA) Weekly Mortgage Applications Survey for the week ending January 9, 2026. 

The MBA’s Market Composite Index rose 28.5% on a seasonally adjusted basis from the previous week, reflecting a broad-based pickup in borrower activity. On an unadjusted basis, total volume jumped 65%, following a holiday-adjusted reporting period.

Leading the charge were refinance applications, which surged 40% week-over-week, and 128% year-over-year.

“Mortgage rates dropped lower last week following the announcement of increased MBS purchases by the GSEs,” said Joel Kan, MBA’s vice president and deputy chief economist. “Lower rates, including the 30-year fixed rate declining to 6.18%, sparked an increase in refinance applications. Compared to a holiday adjusted week, refinance applications surged 40% to the strongest weekly pace since October 2025. The average loan size for refinance applications was also higher, as borrowers with larger loan sizes are typically more sensitive to changes in rates.”

Kan noted that borrowers with larger loan balances were particularly responsive to the rate shift, pushing refinance volume to its strongest weekly pace since October 2025.

Purchase demand also strengthened, as MBA’s seasonally adjusted Purchase Index climbed 16% from the prior week, while unadjusted volume increased 51%, and ran 13% ahead of the same period last year, signaling sustained buyer engagement.

Refinances accounted for 60.2% of total applications, up from 56.6% the prior week. Adjustable-rate mortgages (ARMs) made up 7% of activity, while the FHA share of total applications decreased to 19.2% from 20% the week prior, and VA shares edged lower, decreasing to 16.1% from 17.3% the week prior.