Total mortgage application volume dropped 1% over the week as the average contract interest rate for 30-year fixed-rate mortgages eased to 7.3%. Despite three straight weeks of declines, purchase activity slumped 19% compared to the same period last year, and refinances remained severely depressed. Meanwhile, demand for 5/1 adjustable-rate mortgages expanded, pushing the ARM market share to its highest mark since September 2025. Emerging labor strength, however, has already begun pushing interest rates back up to start the current week.
Key points
Borrowing demand remains deeply depressed year-over-year because prevailing rates still s…: Borrowing demand remains deeply depressed year-over-year because prevailing rates still sit roughly a full percentage point higher than last year.
Buyers are increasingly utilizing adjustable-rate mortgages to manage high monthly financ…: Buyers are increasingly utilizing adjustable-rate mortgages to manage high monthly financing costs during this prolonged housing market freeze.
Upward pressure on borrowing rates has already returned following a hotter-than-expected…: Upward pressure on borrowing rates has already returned following a hotter-than-expected job openings report and modest tech stock gains.
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After a brief bounce the week before, mortgage demand continued its slide last week, despite falling mortgage rates. Total application volume fell 1.% week-to-week, according to the Mortgage Bankers Association's seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances, $832,750 or less, decreased last week to 7.3% from 7.37%, with points decreasing to 0.75 from 0.76, including the origination fee, for loans with a 20% down payment.
"Mortgage rates drifted down to their lowest level since September 2026 last week in the wake of the Federal Reserve's decision to hold on additional rate hikes at its October meeting," said Mike Fratantoni, MBA's SVP and chief economist.
Refinance demand was essentially flat for the week, rising just 0.1%. It was, however, 60% lower than the same week one year ago. Mortgage rates, despite falling for now three straight weeks, are still about a full percentage point higher than they were at this time last year. That gives borrowers very little incentive to refinance.
Applications for a mortgage to purchase a home fell 2% from…
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