The MBA’s Weekly Mortgage Applications Survey, released on Oct. 1, showed that the Market Composite Index—a measure of mortgage loan application volume—decreased on a seasonally adjusted basis from the prior week. On an unadjusted basis, the index dropped by 13 percent from the previous week.
The Refinance Index showed a decrease of 21 percent from the previous week, but it was still 16 percent higher than the same week in 2024. Overall, the refinance share of total mortgages declined to 55 percent of total applications from 60.2 percent the previous week.
“Mortgage rates increased to their highest level in three weeks as Treasury yields pushed higher on recent, stronger than expected economic data,” Joel Kan, MBA’s vice president and deputy chief economist, said in a statement.
The 30-year fixed rate increased to 6.46 percent last week from 6.34 percent the previous week, which was the lowest level since September 2024, according to the MBA.
Kan noted that refinance activity also declined for all loan types, including a 22 percent decrease in conventional refinances and a 27 percent drop for VA refinances.
“After the burst in refinancing activity over the past month, this reversal in mortgage rates led to a sizeable drop in refinance applications, consistent with our view that refinance opportunities this year will be short-lived,” he said.
The MBA also reported that the average loan size fell to $380,100 from $461,300 two weeks ago.
In addition, adjustable-rate mortgage (ARM) applications dropped to 8.4 percent of total applications.
The average contract interest rate for 5/1 ARMs increased to 5.74 percent from 5.53 percent, with points decreasing to 0.46 from 0.49 (including the origination fee) for 80 percent LTV loans.
ARMs allow borrowers to pay a lower rate during a fixed period that can range from six months to 10 years. Following that period, ARMs adjust to the current interest rates. Freddie Mac suggests ARMs for those who plan on selling within five years or before the adjustment period.
The MBA report shows the seasonally adjusted Purchase Index experienced a 1 percent decline from one week earlier. The unadjusted Purchase Index decreased 2 percent from the previous week, but was 16 percent higher than the same week one year ago.
“Purchase applications were down slightly over the week after three consecutive increases, but the strength of the purchase market has also been impacted by other factors such as broader economic conditions, the health of the job market, and housing inventory,” Kan said.
The MBA indicates the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($806,500 or less) rose to 6.46 percent from 6.34 percent, with points increasing to 0.61 from 0.57 (including the origination fee) for 80 percent loan-to-value ratio loans. The effective rate increased from last week.