U.S. Mortgage Applications Rise 3.4% as 30-Year Rates Ease to 7.37%

U.S. mortgage applications increased 3.4% in the week ended October 23 as borrowing costs eased for a second consecutive week, according to data released Wednesday by the Mortgage Bankers Association (MBA). The average contract rate for a 30-year fixed mortgage with a conforming loan balance fell to 7.37% from 7.41%, its lowest level in three weeks.

The rise followed a sharp pullback in applications a week earlier. Applications to purchase homes and to refinance existing mortgages both increased, but each remained well below its year-earlier level. The contrast suggests that the latest rate decline provided some immediate relief without substantially changing the difficult financing environment facing households.

A four-basis-point drop in the reported 30-year rate is modest, and the national average does not represent a rate available to every borrower. Prospective buyers still face borrowing costs that are considerably higher than they were a year ago, even after two weeks of declines.

Lower rates interrupt a weekly decline

In its October 28 weekly applications report, the MBA said its seasonally adjusted Market Composite Index rose 3.4% from the previous week. The index increased 3% without seasonal adjustment. The separate readings account for predictable changes in application patterns during the year, rather than providing competing estimates of the same adjusted measure.

The rebound came after the index dropped 5.3% in the week ended October 16. Purchase applications had fallen 7% that week, while the refinance index declined 2%. Even with the latest increase, overall application activity had not recovered all the ground lost in the preceding week’s decline.

The association’s survey measures applications for closed-end residential mortgage loans submitted through retail and consumer-direct channels. Its respondents include mortgage companies, commercial banks, thrifts and credit unions. Applications can offer an early indication of borrowing interest, but they are not the same as approved loans, completed refinancings or closed home sales.

Rate declines extended beyond the headline conforming mortgage measure. The average 30-year jumbo rate decreased to 7.28% from 7.33%, and the rate for 30-year mortgages backed by the Federal Housing Administration edged down to 7.12% from 7.13%. The average 15-year fixed rate also fell, reaching 6.70% from 6.73%. These figures describe different loan products and should not be read as interchangeable offers to an individual borrower.

Purchase and refinance demand lag last year’s pace

The seasonally adjusted Purchase Index rose 4% over the week, reversing part of the previous week’s decline. Yet the unadjusted measure of purchase applications was still 18% below the corresponding week in 2025. The weekly improvement therefore does not establish that buyers are returning to the market in numbers comparable with a year earlier.

Refinancing showed an even larger annual shortfall. The Refinance Index increased 3% from the prior week but remained 61% below its year-earlier reading. Refinancing accounted for 38.9% of all mortgage applications, little changed from 39.0% the week before, even as the overall application count moved higher.

Joel Kan, the MBA’s vice president and deputy chief economist, attributed the modest rebound partly to the second consecutive decline in borrowing rates. He also pointed to a continuing obstacle for refinancing: many homeowners already have mortgages with rates well below those currently available. A small weekly improvement in new-loan pricing generally does not create an obvious payment-saving opportunity for those borrowers.

A separate Freddie Mac mortgage-rate survey reported that the average 30-year fixed rate fell to 7.32% as of October 22, from 7.40% the previous week. The same series stood at 6.19% a year earlier. Freddie Mac and the MBA use different data and loan-selection methods, so their rate levels are not identical, but both releases documented a decline during the latest reporting period.

Recent government housing data provide a wider backdrop. The Census Bureau and Department of Housing and Urban Development estimated that new single-family homes sold at a seasonally adjusted annual pace of 676,000 in September, with 8.4 months of new-home supply available at that sales rate. Those monthly sales estimates cover a different period and measure than the MBA’s weekly application figures, and their short-term changes are subject to substantial sampling uncertainty.

The headline interest rate is also only part of a mortgage’s cost. For the MBA’s conforming 30-year measure, average discount and origination points rose slightly to 0.76 from 0.75 for loans with an 80% loan-to-value ratio. Borrowers evaluating a new mortgage need to consider fees alongside the stated rate, especially when a small reduction in interest comes with a change in upfront charges.

Adjustable-rate mortgages gain a larger share

Adjustable-rate mortgages accounted for 11.3% of applications, up from 10.5% a week earlier and the highest share in more than a year, according to the MBA. Kan linked the increase to borrowers looking for lower initial monthly payments. The shift is a more distinct change in loan preferences than the small movement in the refinance share.

The survey’s average rate for a five-year initial fixed-period adjustable-rate mortgage, commonly called a 5/1 ARM, declined to 6.41% from 6.46%. That was 0.96 percentage point below the average 30-year conforming fixed rate of 7.37%, although the products differ in how long their interest rates remain fixed. Average points on the 5/1 ARM also increased to 1.20 from 1.11, highlighting the importance of comparing financing charges rather than interest rates alone.

A 5/1 ARM generally holds its initial rate for five years before allowing periodic adjustments under the loan’s terms. The lower starting rate may reduce payments during that initial period, but later payments can change as the rate resets, subject to the contract’s index, margin and caps. A future refinance is not guaranteed, so the initial rate gap does not establish the loan’s total cost over its life.

The MBA’s average rates reflect specific loan categories and assumptions, not personalized lender quotes. Credit history, down payment, loan size and fees can all change the pricing a household is offered. For borrowers now considering adjustable-rate products, the immediate payment difference needs to be weighed against the terms that apply once the initial fixed period ends.