Mortgage rates reached their highest level in nearly three years in the week ended Oct. 2, 2026, prompting fewer borrowers to apply for home loans. The Mortgage Bankers Association reported declines in purchase and refinance activity as borrowing costs rose, adding pressure to buyers already facing affordability challenges.
Key takeaways
Higher rates coincided with a broad pullback in applications, with refinancing seeing the sharpest weekly decline.
- The average 30-year conforming mortgage rate rose to 7.49% from 7.30%.
- Total mortgage applications fell 4.2% week over week.
- Purchase applications declined 2%, while refinance applications dropped 8%.
- The share of applications for adjustable-rate mortgages held at 10.3%.
Rates rise across loan types
The MBA said the average rate for a 30-year fixed mortgage with a conforming balance of $832,750 or less increased by 19 basis points. Rates also moved higher for other loan categories: the average jumbo rate rose to 7.39% from 7.27%, and the average rate on 30-year FHA-backed loans reached 7.14%, up from 6.97%.
The MBA’s Market Composite Index, which tracks applications for both home purchases and refinancing, fell 4.2% from the prior week. The refinance index declined 8%, while purchase applications were down 2%.
Refinancing falls as borrowers reassess costs
With rates about a percentage point above their level a year earlier, fewer homeowners have a financial reason to refinance, MBA Deputy Chief Economist Joel Kan said. Refinance applications fell to their lowest level since 2025 and were less than half the pace recorded a year ago, according to the association.
Refinancing accounted for 37% of applications, down from 38.3% the previous week. The adjustable-rate mortgage share remained at 10.3%. Kan said some borrowers have been choosing ARMs to reduce their initial payments, though the share was unchanged in the latest week.
Purchase activity weakens amid affordability concerns
Applications to buy homes declined across loan types. FHA purchase applications posted the steepest drop, falling 6%, as higher borrowing costs compounded existing affordability pressures, Kan said.
Kristen Jones, broker-owner of REMAX Around Atlanta, said buyers may also weigh home prices and available terms, rather than focusing only on the mortgage rate. She noted that some buyers may find more favorable negotiating conditions than during periods of low rates, when competition and bidding wars were common. Prospective buyers, she said, should assess what they can comfortably afford and consider the full cost of a purchase.