Aerial view of single-family homes lining a street in a neighborhood in Thousand Oaks, California, on August 23, 2026.
Kevin Carter | Getty Images
Although there was a temporary recovery last week, demand for mortgages continued to decline last week despite a decline in mortgage interest rates. Total application volume fell 1.2% from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances of $832,750 or less, including origination fees for loans with a 20% down payment, fell from 7.37% last week to 7.3%, and points also fell from 0.76 to 0.75.
“Mortgage rates fell last week to their lowest level since September 2026 after the Federal Reserve decided to hold off on further rate hikes at its October meeting,” said Mike Fratantoni, senior vice president and chief economist at MBA.
Refinance demand was almost flat this week, rising just 0.1%. However, it was down 60% compared to the same week a year ago. Mortgage rates are still about 1 percentage point higher than they were at this time last year, even though they have now declined for three consecutive weeks. As a result, borrowers have little incentive to refinance.
The number of applications for mortgage loans to purchase homes decreased by 2% from the previous week and by 19% from the previous year. The housing market has shown no signs of thawing ever since it became extremely frozen due to a sharp interest rate hike in September.
The share of variable rate mortgages, which offer lower interest rates but carry the risk of eventually being reset to a higher rate, continued to rise. The average interest rate for a 5/1 ARM fell to 6.29% from 6.41% the previous week.
“As we have highlighted in recent weeks, more borrowers are choosing ARMs in this environment to lower their down payments, and the share of ARMs is at its highest level since September 2025,” Fratantoni added.
Mortgage rates rose slightly earlier this week, according to a separate Mortgage News Daily survey. This followed a hotter-than-expected report on recruitment.
“All else being equal, strong labor market data tends to put upward pressure on interest rates,” said Matthew Graham, chief operating officer at Mortgage News Daily.
Correction: Total applications fell 1.2% week over week, according to the Mortgage Bankers Association’s seasonally adjusted index. The diagram was misspelled in previous versions.
