The average contract rate on a standard 30-year fixed-rate mortgage climbed to 7.12% last week, up from 6.97% the prior week. Meanwhile, the share of adjustable-rate mortgage (ARM) applications jumped to 9.8% of total loan demand.
Refinance applications dropped 3% for the week and remain 62% lower than the same period last year. Aerial footage from a small coastal residential development in Encinitas, California, shows a "sold" sign standing beside a newly built single-family home.
Mortgage rates reached their highest level since 2024 last week, pulling loan demand back down as more borrowers shifted toward higher-risk loan products. The Mortgage Bankers Association's seasonally adjusted index showed total application volume falling 1.5% from the previous week.
For conforming loans up to $832,750, which meet Fannie Mae and Freddie Mac purchasing standards, the average contract rate on a 30-year fixed mortgage rose from 6.97% to 7.12%. Points, including the origination fee, for loans with a 20% down payment increased to 0.73 from 0.72.
Refinance applications slipped 3% on the week and sit 62% below year-ago levels, marking the lowest reading since February 2025. At this time last year, the 30-year fixed rate stood at 6.34%, a full 78 basis points lower than today's rate.
Purchase mortgage applications decreased 1% for the week and are down 11% compared with the same week a year ago. The fall housing market, typically the second-busiest season behind spring, has now begun—but real estate agents are already noticing a significant slowdown in activity due to elevated rates.
Both buyers and current homeowners are searching for ways to cut costs, even if that means choosing riskier adjustable-rate loans. Mike Fratantoni, senior vice president and chief economist at the Mortgage Bankers Association, noted that fixed rates have moved substantially higher, prompting more borrowers to select ARMs. He pointed out that 5/1 ARM rates are more than a full percentage point below fixed-rate products, driving the ARM share of applications to 9.8%.
The previous week, ARM applications accounted for just 8.4% of total volume. During the early pandemic period, when mortgage rates repeatedly hit historic lows, the ARM share was only 3%. Adjustable-rate mortgages offer a fixed interest period of up to 10 years; once that fixed phase ends, the rate adjusts upward or downward based on market conditions.
According to a separate survey from Mortgage News Daily, mortgage rates ticked slightly lower early this week, driven by falling oil prices and a pullback in bond yields.
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