Last week, mortgage rates reached 7.12% for 30-year fixed-rate loans, up from 6.97%, according to the Mortgage Bankers Association. This increase contributed to a 1.5% drop in total mortgage application volume. Refinance applications fell 3% week-over-week and were down 62% compared to the same week last year, marking the lowest level since February 2025.
The purchase mortgage applications also declined by 1% for the week and were 11% lower year-over-year. As the fall housing market begins, real estate agents are observing a significant slowdown due to these elevated rates. In response to the higher fixed rates, more borrowers are turning to ARMs, which now account for 9.8% of applications, up from 8.4% the previous week.
This is a notable increase from the pandemic period when ARM applications were around 3%. Mike Fratantoni, the MBA's chief economist, noted that ARMs offer lower initial rates, making them more attractive as fixed rates rise. The market may see some relief as mortgage rates have slightly decreased at the start of this week, influenced by falling oil prices and lower bond yields