New home for sale advertised in Huntington Beach, California on September 25, 2026.
Frederic J. Brown | AFP Getty Images
Mortgage rates last week rose to their highest levels in nearly three years. The continued demand for refinances and home purchases in a sharp and steady decline.
Total mortgage application volume fell 4.2% 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 rose last week to 7.49% from 7.30%, with a point increase to 0.84 from 0.75, including origination fees, for loans with a 20% down payment.
Applications for home loan repayments, which depend heavily on rates, fell 8% for the week and were 56% lower than the same week a year ago. As rates rise each week, the pool of eligible refinances shrinks.
“Many homeowners have an incentive to repay at these rates,” said Joel Kan, an MBA economist, in a release. “With rates about a percentage point higher than a year ago, refinance applications last week were at their lowest level since 2025 and fell to less than half of last year’s pace.”
Applications for mortgages to buy houses declined 2% for the week and 15% lower than the same week a year ago.
“Purchase activity declined across all loan types with FHA purchase applications the most, down 6%, as these higher rates add to affordability challenges for many homebuyers,” Kan added. “As noted in recent weeks, a higher portion of borrowers are choosing ARMs [adjustable-rate mortgages] to lower the initial payment, with the share of ARM stable at 10.3% last week.
Adjustable mortgages offer lower interest rates but can adjust in either direction once the terms are fixed. That is why they are considered more risky. By way of comparison, in the first years of the pandemic, when mortgage rates reached multiple records, the share of ARM applications was less than 3%.
Mortgage rates retreated slightly this week, according to a separate survey from Mortgage News Daily. While the rate remained near the highest since 2003, they were near the lowest in just over a week at 7.56% for the average lender.
“Is it giving? Is this a sign that the recent upward momentum is starting to wane?” wrote Matthew Graham, chief operating officer at Mortgage News Daily. “It’s too much to conclude on this, but it’s a little encouraging that Monday’s long-term high actually matched the high seen on September 30. This is the ‘double top’ behavior that some analysts look for when trying to identify a change in momentum.