Applications Decline for a Fifth Straight Week
The Mortgage Bankers Association reported October 7 that total mortgage applications fell 4.2% on a seasonally adjusted basis for the week ending October 2, compared with the prior week, according to the group's Weekly Mortgage Applications Survey. The decline marked a fifth consecutive weekly drop, according to the trade group's data. On an unadjusted basis, the composite index fell 4% from the week before.
MBA Vice President and Deputy Chief Economist Joel Kan said mortgage rates moved to their highest level in almost three years last week, with the 30-year fixed rate reaching 7.49% as both Treasury rates increased and spreads widened with the increase in rate volatility. That reading is the highest the MBA survey has recorded since November 2023. MBA's calculations show the average contract rate on a 30-year fixed loan with a conforming balance of 832,750 dollars or less rose to 7.49% from 7.30% the week before, with points rising to 0.84 from 0.75 for loans with 20% down. The average rate on 30-year FHA-backed loans climbed to 7.14% from 6.97%, and the 15-year fixed average rose to 6.71%.
Refinancing Nearly Disappears
The refinance index fell 8% from the prior week and stood 56% below the same week a year earlier, according to the MBA release. The refinance share of total mortgage activity slipped to 37.0% of applications, down from 38.3% the week before. Kan noted that very few homeowners have an incentive to refinance at current rates, and that the jump in borrowing costs has caused many potential borrowers to step back from the purchase market as well.
The seasonally adjusted purchase index fell 2% from the prior week, with the unadjusted purchase index down 2% and 15% below the same week in 2025. FHA purchase applications fell the hardest among loan types, declining 6%, which Kan tied to ongoing affordability challenges for lower-down-payment borrowers who rely most heavily on government-backed financing. Housing news outlets covering the release noted that the Federal Housing Administration share of total applications also edged down from 16.7% the week before. That decline in FHA share reflected the sharper pullback among government-backed borrowers relative to conventional applicants during the week.
A Year-Over-Year Comparison in Context
As a labeled calculation: a 56% year-over-year decline in the refinance index means that for every 100 refinance applications filed in the first week of October 2025, fewer than 44 are now being filed in the equivalent week of 2026, illustrating how sharply higher rates have shut the door on refinancing for most existing borrowers.
MBA's data also showed borrowers shifting toward adjustable-rate products to manage monthly payments. The ARM share of applications held steady at 10.3% last week, which Kan described as part of a pattern of a higher share of borrowers opting for ARMs to lower their initial payments as fixed rates climb further out of reach for many buyers. Realtor.com's coverage of the same survey tied the rate surge to a broader bond-market selloff, noting that the 10-year Treasury yield had climbed to a 24-year high amid rising oil prices and inflation fears connected to the conflict in the Middle East, a dynamic that pushed Freddie Mac's own 30-year average to 7.28% for the week ending October 1, before climbing further the following week.