- Rates are easing. The average contract rate on 30-year fixed-rate mortgages with conforming balances of $832,750 or less fell to 7.3% from 7.37% last week, a 7-basis-point drop by our calculation, according to the Mortgage Bankers Association. Points declined to 0.75 from 0.76 for loans with a 20% down payment.
- Buyers are not coming back. Total application volume fell 1.2% week to week, and applications to purchase a home fell 2% and were 19% lower than a year ago. The housing market shows no sign of thawing after September’s sharp rate increase sent it into a deep freeze.
- Refinancing is stalled. Refinance demand rose just 0.1% for the week and was 60% lower than the same week a year ago, because rates, despite three straight weekly declines, are still about a full percentage point higher than a year ago.
- Borrowers are turning to ARMs. The average rate on a 5/1 adjustable-rate mortgage fell to 6.29% from 6.41%, and MBA chief economist Mike Fratantoni said the ARM share is at its highest level since September 2025 as borrowers seek lower initial payments.
What Happened?
Mortgage demand continued to slide last week despite falling rates, according to the MBA’s seasonally adjusted index. Fratantoni said rates “drifted down to their lowest level since September” in the wake of the Federal Reserve’s decision to hold off on additional rate hikes at its October meeting. Rates moved slightly higher to start this week, according to Mortgage News Daily, after a hotter-than-expected report on job openings.
Why It Matters?
Lower rates are not enough to revive housing when they remain near 7.3% and about a point above last year’s levels. Weak purchase and refinance activity hurts mortgage lenders, homebuilders and housing-related businesses, and limits a key channel through which monetary policy reaches households. The rising ARM share shows affordability stress, as borrowers accept reset risk to lower initial payments. Mortgage News Daily’s Matthew Graham noted that weakness in tech stocks has been a key factor behind lower rates in recent weeks, tying housing finance closely to equity market swings.
What’s Next?
The direction of mortgage rates now depends on labor data and the Fed. Graham said stronger labor market data tend to put upward pressure on rates, making Friday’s October jobs report a key test. Investors will also watch Treasury yields after the midterm elections and any Fed signals on renewed hikes, which would push mortgage rates back up.
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Source: CNBC
