Borrowers pulled back as rates jumped. The Mortgage Bankers Association's gauge of applications, adjusted for seasonal patterns, fell 1.5% from the prior week. Purchase applications slipped 1% and were 11% lower than the same week a year earlier.
When borrowing costs rise, buyers tend to hit pause. The fall housing season - typically second only to spring in activity - is starting, but agents are already reporting a noticeable slowdown tied to higher rates.
The average contract rate for a 30-year fixed mortgage on conforming balances up to $832,750 increased to 7.12% from 6.97%. Points, including the origination fee, edged up to 0.73 from 0.72 for loans with 20% down. Refinancing applications dropped 3% for the week, sat 62% below the year-ago level, and hit their lowest mark since February 2025. At this time last year, the 30-year fixed rate was 78 basis points lower.
Buyers and current homeowners are scanning for savings anywhere possible, even if that means leaning into adjustable-rate loans.
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The prior week, ARMs made up 8.4% of applications. In the early pandemic years, when rates were repeatedly hitting record lows, ARMs barely cracked 3%.
Many adjustable-rate mortgages offer an initial fixed period that can last up to 10 years, after which they reset - either higher or lower - based on the market.
Mortgage News Daily noted a slight dip in rates to start this week as oil prices slipped and bond yields moved lower. Big picture for household budgets: fixed rates are elevated, and 5/1 ARMs have been running more than a percentage point below comparable fixed loans, which means today's savings trade off against tomorrow's rate risk.
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