Mortgage rates rose sharply in the week ending Oct. 2, reaching their highest level in almost three years and prompting declines in both home-purchase and refinancing applications. The Mortgage Bankers Association said its overall application measure fell 4.2% from the prior week, as higher borrowing costs added pressure to an already challenging affordability environment.
Key takeaways
- The average 30-year conforming fixed mortgage rate increased to 7.49%, up from 7.30% the week before.
- Mortgage applications fell 4.2%; purchase applications declined 2% and refinancing applications dropped 8%.
- FHA purchase applications recorded the steepest decline among loan types, falling 6%.
- Adjustable-rate mortgages accounted for 10.3% of applications, unchanged from the previous week.
Rates rose across major loan categories
The average rate for a 30-year fixed mortgage with a conforming balance of $832,750 or less climbed 19 basis points to 7.49%. The average jumbo rate rose to 7.39%, from 7.27%, while the average rate on 30-year FHA-backed mortgages increased to 7.14%, up from 6.97%.
The higher rates marked a significant year-over-year change: borrowing costs were about one percentage point above their level a year earlier, according to MBA Vice President and Deputy Chief Economist Joel Kan.
Refinancing weakened as purchase activity slowed
The MBA’s Market Composite Index, which tracks applications for both home purchases and refinancing, fell 4.2% from the previous week. Purchase applications were down 2%, while the refinance index declined 8%. Refinancing made up 37% of applications, compared with 38.3% a week earlier.
Kan said few homeowners have a financial reason to refinance at current rates. Refinancing applications also fell to their lowest level since 2025 and were less than half the pace recorded a year earlier, the MBA said.
Purchase applications declined across loan types, with FHA applications down 6%. Kan said higher rates are compounding affordability challenges for buyers. The ARM share remained at 10.3%, as some borrowers continued to consider adjustable-rate loans to reduce initial payments.
Buyers weigh rates against market conditions
Kristen Jones, broker-owner of REMAX Around Atlanta, said buyers may find more favorable prices and terms in the current market than during periods of lower rates, when competition and bidding wars were more common. She advised buyers to assess what they can comfortably afford and consider overall market conditions, rather than focusing on the mortgage rate alone.
The latest figures show how quickly rising borrowing costs can affect both sides of the housing finance market. For prospective buyers and homeowners considering a refinance, the immediate impact is a narrower set of affordable options and fewer applications moving forward.