Aerial view of two-story single-family homes lining a neighborhood street in Thousand Oaks, California, on September 23, 2026.
Kevin Carter | Getty Images
Mortgage rates fell for the fourth consecutive week, but that level ended on Tuesday after the monthly inflation report was higher than expected. The average interest rate on a 30-year fixed mortgage rose 12 basis points from Monday to 7.30%, according to Mortgage News Daily. It was the largest single-day increase in more than a month.
The Consumer Price Index showed broader price pressures, not just fuel-related costs. This comes after the monthly jobs report released on Friday also showed the economy is hotter than analysts expected.
“We expected today’s data to carry much more weight than last week’s jobs report, given that the Fed has made it clear that it is currently focusing more on the inflation component of employment (as opposed to the ‘full employment’ component). The immediate reaction was understandable,” said Matthew Graham, chief operating officer at Mortgage News Daily.
The increase came after a month of interest rate holding finally allowed demand for mortgages to recover. The number of mortgage applications rose 6.2% last week from the previous week, according to the Mortgage Bankers Association’s seasonally adjusted index.
That’s because last week, MBA’s weekly average showed that the 30-year fixed interest rate for a loan with a 20% down payment fell from 7.30% to 7.21%. This was the fourth consecutive week of decline and the lowest level since mid-September.
As a result, the number of mortgage refinance applications last week increased by 5% compared to the previous week, but was still 57% lower than the same week last year.
“Furthermore, FHA rates are back below 7%, more than 20 basis points lower than conforming rates, which is helpful for first-time homebuyers entering the market now,” said Joel Kang, MBA vice provost and deputy chief economist.
The number of applications for mortgages to buy homes rose 8% for the week, but fell 18% from a year earlier. As interest rates eased, the proportion of applications for variable rate home loans also fell slightly. ARM loans have lower interest rates but higher risk. It will become even more popular as interest rates rise and borrowers seek savings.
“While the downward trend in interest rates has helped increase application activity, the pace of purchase and refinance applications remains significantly lower than a year ago. Applications for conventional, VA, and FHA purchase applications increased week on week, with growth particularly strong for FHA and VA loans,” Kang added.
