Mortgage application volumes declined last week for the fifth consecutive session as borrowing costs continued to rise, weighing on homebuying demand.

The Mortgage Bankers Association (MBA) said Wednesday that mortgage rates for typical 30-year home loans climbed to 7.49% over the week ending Oct. 2. That is their highest level since late 2023, up from 7.3% the previous week and 6.85% just a month earlier.

As a result, seasonally adjusted mortgage application volumes slumped 4.2% — following a 6% decline the previous week — according to the MBA’s Market Composite Index, which tracks application activity.

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“Very few homeowners have an incentive to refinance at these rates, and the jump in borrowing costs has caused many potential borrowers to step back from the purchase market,” said Joel Kan, deputy chief economist of the MBA, in the weekly report.

The purchase component index slid 2% from the previous week to land 15% below year-ago levels on an unadjusted basis. Refinance applications fell 8% over the week, pushing the refinance share of total application activity down to 38%.

Kan attributed the recent spike in mortgage rates to ongoing volatility in U.S. Treasury markets and widening spreads. After kicking off 2026 around 6%, rates have exceeded 6.5% since late May and have surpassed 7% since mid-September, according to MBA data.

Last week’s decline in purchase activity transpired across all loan types, with particularly weak demand from borrowers applying for loans insured by the Federal Housing Administration, which declined 6%. Application share for FHA loans declined to 16.4% as average rates across that government channel jumped to 7.14% from 6.97%.

The share of applications for adjustable-rate mortgages, however, remained elevated and unchanged at 10.3% last week. Amid the current rate environment, borrowers seeking ARMs can secure rates well below those for 30-year products.

Mortgage rates for 5/1 ARMs, for example — where the loan carries a fixed rate for five years and then adjusts on an annual basis — fell to 6.43% last week, more than 1% lower than average 30-year rates.

Meanwhile, applications for government loans backed by the Department of Veterans Affairs dipped by just one basis point to 11.8% last week.