In an aerial view, two-story single-family homes line the streets of the neighborhood on September 23, 2026 in Thousand Oaks, California.
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Mortgage rates fell for a second week, finally bringing consumers back to brokers. A growing stock, however, applies to cleaner loans at lower rates.
Total mortgage application volume rose 3.4% last week compared to the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for a 30-year fixed-rate mortgage with a qualifying loan balance of $832,750 or less dropped to 7.37% from 7.41%, with a point increase to 0.76 from 0.75, including origination fees, for loans with a 20% down payment.
“The drop in rates is a relief for borrowers, with applications picking up again, especially conventional applications,” said Joel Kan, vice president and deputy chief economist at MBA, in a release. “Mortgage rates are still more than a percentage point higher than the same week last year and most homeowners still have rates lower than current market rates.”
And that’s why the refinance is still running at the end of last year. Applications for home loan refinance rose 3% for the week but were 61% lower than the same week a year ago. About half of all borrowers now have mortgage rates below 4%, according to data from the Federal Housing Finance Agency’s National Mortgage Database.
Applications for mortgages to buy homes rose 4% for the week but were still 18% lower than the same week a year ago. While mortgage rates have pulled back somewhat in recent weeks, they are still higher than they were just a few months ago, and home prices are still rising. Potential homebuyers are also worried about the broader economy, and, anecdotally, some agents say buyers are waiting to see the results of the midterm elections.
As borrowers look for savings, more and more are choosing adjustable rate mortgages. ARM application share rose to 11.3% last week, the highest level in more than a year. The average contract interest rate for 5/1 ARMs fell to 6.41% from 6.46%. ARMs are considered riskier because they adjust to whatever the current market rate is at the end of the fixed term.
Mortgage rates have not moved to start this week, according to a separate survey from Mortgage News Daily. This is because there has not been much economic data for the bond market to react to. While the Federal Reserve is not expected to announce a change in interest rates at Wednesday’s meeting, the market can look forward to comments from Fed Chairman Kevin Warsh.