Mortgage rates increased last week, with the average rate for 30-year fixed-rate mortgages rising to 6.85%, the highest since June 2025.
This uptick has prompted a notable shift in borrower preferences, with demand for adjustable-rate mortgages (ARMs) climbing to 8.5% of all mortgage applications, up from 8% the previous week and significantly higher than the 3% seen during the early pandemic period. The average rate for a 5-year ARM decreased to 5.82%.
The overall mortgage application volume fell by 2.7%, driven largely by a 6% drop in refinance applications, which are now 25% lower than a year ago. Home purchase applications remained relatively stable, down just 0.2% week-over-week but up 4% compared to the same week last year.
Joel Kan, vice president and deputy chief economist at the Mortgage Bankers Association, noted that higher rates are impacting potential homebuyers despite an increase in housing inventory. As investors await upcoming inflation data, which could influence mortgage rates further, the current trends suggest a cautious outlook for the housing market