Mortgage applications fall 6% as the MBA rate hits 7.3%; ARM share climbs to 10.3%
Refinance applications fell 9% and purchases 4% in the week to Sept. 25. Borrowers are turning to adjustable-rate loans, but the 5/1 ARM rate jumped 37 basis points in the same week, twice the rise in the fixed rate.
Mortgage applications fell 6% in the week ended September 25, the Mortgage Bankers Association said Wednesday, as its average 30-year fixed contract rate rose for a sixth straight week to 7.30% from 7.12%. That is the highest since November 2023. Refinance applications fell 9% on the week and were 56% below a year earlier. The seasonally adjusted purchase index fell 4%, and unadjusted purchase activity was 14% lower than the same week last year, HousingWire reported.
"Mortgage rates jumped to their highest level in almost three years, pushing borrowers to the sidelines," the MBA said in its weekly release. Government refinances fell 13%, with FHA and VA applications both down by double digits.
What the week cost a borrower
The MBA's rate moves, turned into principal and interest on a $400,000, 30-year loan:
| Loan type | Prior week | This week | Monthly payment now | Change |
|---|---|---|---|---|
| 30-year fixed, conforming | 7.12% | 7.30% | $2,742 | +$49 |
| 30-year fixed, FHA | 6.78% | 6.97% | $2,653 | +$51 |
| 5/1 ARM (first five years) | 6.10% | 6.47% | $2,520 | +$96 |
Jumbo rates rose less, to 7.27% from 7.15%, which leaves jumbo loans slightly cheaper than conforming ones.
The ARM escape hatch is narrowing
The MBA said adjustable-rate loans, at rates around 80 basis points below fixed loans, made up 10.3% of applications, the highest share since October 2025. On the numbers above, a 5/1 ARM still saves about $222 a month against a conforming fixed loan for the first five years.
The part the headline misses is how fast that gap is closing. The ARM rate rose 37 basis points in one week, about twice the 18-point rise in the fixed rate. The monthly cost of the ARM went up almost twice as much as the fixed payment. A week ago the ARM saved about $270 a month on this loan. Now it saves about $222, so close to a fifth of the advantage went in a single week, and the borrower still carries the reset risk after year five.
Who it hits
- Buyers closing in October and November who have not locked: each 0.18-point step on a $400,000 loan is about $49 a month, or roughly $590 a year.
- Self-employed borrowers and landlords who planned a cash-out refinance: refinance demand is running 56% below last year, and FHA and VA refinances fell fastest.
- Loan officers and brokers: the refinance share slipped to 38.3% of applications. Xactus, which tracks credit pulls, said its mortgage intent index fell 7.6% to 108.9, its lowest non-holiday reading this year.
The MBA survey measures contract rates on applications taken last week, so it runs behind daily indexes. Mortgage News Daily's index was already at 7.58% on Tuesday, which we covered in our rates story. Mortgage rates follow the 10-year Treasury, which is on our 10-year chart. Freddie Mac's weekly survey is due Thursday.
Sources: Mortgage Bankers Association weekly survey via HousingWire; Mortgage News Daily. Payment figures are our calculations for principal and interest only. This is market information, not investment advice.
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