Last week, mortgage application volume fell by 2.75% compared to the previous week and is now 37.5% lower than the same week last year, according to the Mortgage Bankers Association. The average interest rate for 30-year fixed-rate mortgages increased to 7.50%, marking a rise of over one percentage point from a year ago.
As a result, borrowers are increasingly turning to adjustable-rate mortgages (ARMs), which accounted for 10.5% of applications, the highest share since October 2025. This shift is driven by the need for lower monthly payments, despite the inherent risks associated with ARMs.
Refinancing applications have been particularly affected, dropping 0.4% for the week and 56% year-over-year, while purchase mortgage applications fell by 4% week-over-week and are down 16% from last year. Although there are more homes available for sale, they are primarily in the higher price range, and the overall market is experiencing slower sales, contributing to rising home prices.
According to Lawrence Yun, chief economist at the National Association of Realtors, the recent increase in mortgage rates is limiting the number of buyers who can qualify for home purchases, indicating a challenging environment for the housing market