Mortgage demand slips as refinance applications hit lowest level since 2025

Mortgage Bankers Association's Composite Index dropped 4.2% to 204.7 during the week ended October 2, compared to -6.0% to 213.6 seen in the prior week, according to the Weekly Mortgage Applications Survey.

The Market Composite Index is a measure of mortgage loan application volume.

The Purchase Index fell 2.1% to 145.1 vs. -4.3% to 148.2 a week ago, while the Refinance Index was down 7.5% to 515.8 vs. -8.7% to 557.8 in the previous period.

30-year fixed-rate mortgages rose to 7.49% from 7.30%.

"Mortgage rates moved to their highest level in almost three years last week, with the 30-year fixed rate reaching 7.49% as both Treasury rates increased and spreads widened with the increase in rate volatility," said Joel Kan, MBA's vice president and deputy chief economist.

"Very few homeowners have an incentive to refinance at these rates, and the jump in borrowing costs has caused many potential borrowers to step back from the purchase market. With rates roughly a percentage point higher than a year ago, refinance applications last week were at the lowest level since 2025 and fell to less than half of last year's pace," added Kan.

"Purchase activity decreased across all loan types with FHA purchase applications falling the most, declining 6%, as these higher rates add to ongoing affordability challenges for many homebuyers. As noted in recent weeks, a higher share of borrowers are opting for ARMs to lower their initial payments, with the ARM share steady at 10.3% last week," said Kan.