Mortgage demand took a bath last week as borrowing costs continued to rise amid inflation concerns and surging Treasury yields.
Mortgage loan application volumes declined 6% on a seasonally adjusted basis over the week ending Sept. 25, the Mortgage Bankers Association (MBA) reported Wednesday, marking the fourth consecutive week of declines.
Purchase applications slid 4% lower from the previous week, landing 14% below year-ago levels and hitting their slowest pace since April 2025. Refinance demand fell to its slowest pace since January 2025, with application volumes down 9% from the previous week.
“Mortgage rates jumped to their highest level in almost three years, pushing borrowers to the sidelines,” said Joel Kan, deputy chief economist of the MBA, in commentary accompanying the trade group’s latest application figures.
Average contract mortgage rates for 30-year fixed-rate home loans averaged 7.3% last week, according to MBA indexes, sustaining upward momentum for the sixth consecutive week. Mortgage rates had averaged 7.12% the previous week and about 6.8% a month ago.
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Last week’s surge in borrowing costs pushed average 30-year rates to their highest level since November 2023, up from around 6.5% a year ago. After sliding to around 6% at the start of 2026, typical mortgage rates have remained above 6.5% since late May.
Borrowers are still finding opportunities to transact in a market strained by higher rates, however.
“ARM loans, with rates around 80 basis points lower than fixed-rate loans, accounted for 10.3% of applications, the highest share since October 2025,” Kan noted. That was up from a 9.8% application share for adjustable-rate mortgages the previous week.
Even so, the pricing advantage between ARMs and typical 30-year rates narrowed over the week, from 1% during the previous period to the 0.8% gap noted by Kan. Mortgage rates for 5/1 ARMs — where the loan carries a fixed rate for five years and then adjusts on an annual basis — averaged 6.47% last week, up from 6.1%.
Across government channels, the share of applications for loans insured by the Federal Housing Administration was unchanged at 16.7%, as average mortgage rates for FHA loans increased to 6.97% from 6.78%. Applications for government loans backed by the Department of Veterans Affairs eased lower by one basis point to 11.9% of total applications.
