Borrowing costs jumped again, and home loan demand kept shrinking. The MBA's seasonally adjusted index showed total applications fell 4.2% from the prior week. For a standard 30-year fixed with a conforming balance of $832,750 or less, the average contract rate increased to 7.49% from 7.30%. For borrowers putting 20% down, points increased to 0.84 from 0.75, with the origination fee counted in that figure.
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Refinancing took the bigger hit. Requests to refi slid 8% from the previous week and were running 56% below the comparable week a year earlier as rising rates shrink the pool of borrowers who can benefit. "Very few homeowners have an incentive to refinance at these rates," said Joel Kan, an MBA economist. "With rates roughly a percentage point higher than a year ago, refinance applications last week were at the lowest level since 2025 and fell to less than half of last year's pace."
Buying activity softened too. Applications to purchase a home declined 2% week over week and were 15% below year-ago levels. "Purchase activity decreased across all loan types with FHA purchase applications falling the most, declining 6%, as these higher rates add to ongoing affordability challenges for many homebuyers," Kan said.
More borrowers are turning to adjustable-rate mortgages to trim initial payments, with ARMs holding a 10.3% share last week. ARMs generally start cheaper, but after the fixed period the rate can move up or down, which adds risk. For context, during the early pandemic years when fixed rates were repeatedly setting record lows, ARMs made up less than 3% of applications.
There is a tiny bit of relief showing up this week. A separate read from Mortgage News Daily showed a slight pullback, putting the average lender at 7.56%. That remains close to the highest readings since 2003, yet it's also around the lowest level seen in a little more than a week.
"What gives? Is this a sign that recent upward momentum is starting to wane?" wrote Matthew Graham, who serves as Mortgage News Daily's chief operating officer. "It's too soon to conclude such things, but it is somewhat encouraging that Monday's long-term high was basically right in line with the high seen on September 30th. This is the sort of 'double top' behavior that some analysts look for when trying to identify momentum shifts."
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