Mortgage rates hit their highest level in almost three years last week, driving down mortgage applications across the board, the Mortgage Bankers Association said. 

The average 30-year fixed-rate mortgage with a conforming balance of $832,750 or less climbed 19 basis points to 7.49% from 7.30% in the week ended Oct. 2, the MBA said. The average rate for jumbo mortgages of $832,750 and above climbed from 7.27% to 7.39%, while the rate for 30-year fixed-rate mortgages secured by the FHA rose to 7.14% from 6.97%. 

The Market Composite Index, which measures mortgage-application volume for both purchase and refinancing loans fell 4.2% from the previous week, while purchase applications slipped 2% week over week, and the refinance index dropped 8%. 

“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,” MBA Vice President and Deputy Chief Economist Joel Kan said. “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.” 

The refinance share of mortgage activity decreased from 38.3% of total applications the previous week to 37.0%, while the adjustable-rate mortgage (ARM) share of activity was flat at 10.3% of total loan applications. 

“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,” Kan said. “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.” 

Kristen Jones, broker/owner of REMAX Around Atlanta, noted that potential buyers should look at the bigger picture. 

“Mortgage rates may be higher, but buyers are more likely to find attractive terms and sales prices right now,” she said. “That’s a very different environment from when rates were low, and buyers often found themselves competing in bidding wars. The key is to understand what you can comfortably afford and look at the full picture, not just the mortgage rate, when deciding whether it’s the right time to buy.”