Key points: For conforming 30-year fixed-rate mortgages of $832,750 or less, the average contract rate rose to 7.49% last week from 7.30%. Purchase mortgage applications fell 2% week over week and were down 15% from a year earlier. Adjustable-rate mortgage (ARM) applications held a 10.3% share of total volume. A newly built home is shown listed for sale in Huntington Beach, California, on September 25, 2026.

Mortgage rates climbed last week to their highest level in nearly three years, driving both refinancing and home purchase loan demand to keep weakening sharply.

The Mortgage Bankers Association's seasonally adjusted index showed total mortgage application volume fell 4.2% from the prior week. For conforming 30-year fixed mortgages of $832,750 or less, the average contract rate rose to 7.49% last week from 7.30%; for loans with a 20% down payment, points including the origination fee increased to 0.84 from 0.75.

Refinance applications, which are highly sensitive to rates, dropped 8% week over week and plunged 56% year over year. As rates rise week after week, the pool of homeowners who qualify for refinancing keeps shrinking.

"At today's rates, there is very little incentive for homeowners to refinance," Joel Kan, an economist at the Mortgage Bankers Association, said in the report. "With rates about a percentage point higher than a year ago, refinance applications fell last week to their lowest level since 2025 and were less than half the volume of a year earlier."

Purchase mortgage applications fell 2% from the prior week and 15% from a year earlier.

"Purchase applications declined across all loan types, with Federal Housing Administration (FHA) purchase applications seeing the largest drop at 6%," Kan added. "Higher rates are further intensifying affordability pressures for many homebuyers. In recent weeks, more borrowers have been turning to adjustable-rate mortgages to lower their initial monthly payments; the ARM share held steady at 10.3% last week."

Adjustable-rate mortgages carry lower initial rates but are riskier because the rate can rise or fall after the fixed period ends. By comparison, when fixed mortgage rates repeatedly hit record lows in the early days of the pandemic, the ARM share of applications was less than 3%.

A separate survey from Mortgage Daily News showed mortgage rates edged lower this week. Although they remain broadly in a range that is the highest since 2003, the average rate among major lenders fell to 7.56%, the lowest in more than a week.

"What does this mean? Is the recent upward momentum in rates starting to fade? It is still too early to draw a conclusion," Matthew Graham, chief operating officer of Mortgage Daily News, wrote. "But one signal is worth noting: this Monday's long-term high was essentially in line with the high on September 30, forming a 'double top' pattern that some analysts watch when judging a trend reversal."