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Weekly Mortgage Demand Wanes as 30-Year Fixed Rate Reaches Highest in Nearly 3 Years

11:43 AM ET 10/07/2026 - MT Newswires

The market composite index, which measures loan application volume, decreased 4.2% on a seasonally adjusted basis from one week earlier in the week ended Oct. 2. On an unadjusted basis, the index fell 4%.

The average interest rate for 30-year fixed mortgages with conforming loan balances of $832,750 or less jumped to 7.49% from 7.3% a week ago. That's the highest it's been in almost three years as "Treasury rates increased and spreads widened," MBA Deputy Chief Economist Joel Kan said.

The 10-year Treasury yield hit 5.35% on Wednesday, its highest point since 2002, CNBC reported. The 10-year yield is seen as a proxy for rates on mortgages and other loans.

In September, the Federal Reserve lifted interest rates by 25 basis points, its first hike in just over three years, to combat inflation that has run above its 2% target for years.

For loan balances higher than $832,750, the 30-year interest rate climbed to 7.39% from 7.27%. For 15-year loans, the rate advanced to 6.71% from 6.56% week to week.

The refinance index slid 8% on a weekly basis and slumped 56% from the year before. "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," according to Kan.

Current rates provide limited incentives for homeowners to refinance, while the increase in borrowing costs have forced many potential borrowers to pull back from the purchase market, Kan said.

The purchase index retreated 2% on both adjusted and unadjusted bases from a week earlier. "Purchase activity decreased across all loan types with (Federal Housing Administration) purchase applications falling the most, declining 6%, as these higher rates add to ongoing affordability challenges for many homebuyers," according to Kan.

Affordability concerns have also weighed on homebuilders. Last month, homebuilder KB Home (KBH) cut its full-year housing gross profit margin estimates, while rival Lennar (LEN) reported weaker-than-expected fiscal third-quarter results.

US new-home sales rose 6.4% in August to a seasonally adjusted annual rate of 684,000, the highest since December, the Census Bureau and the Department of Housing and Urban Development reported Sept. 24. Oxford Economics said that day that the renewed rise in mortgage rates will test the housing market.

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