Mortgage rates fell for the third consecutive week, dropping the average contract interest rate on 30-year fixed-rate mortgages to 7.3% from 7.37%, according to the Mortgage Bankers Association. Despite the decline, total mortgage application volume fell 1.2% week over week, signaling continued weakness in housing demand.
Mike Fratantoni, senior vice president and chief economist at the MBA, attributed the rate decline to the Federal Reserve's decision to hold on additional rate hikes at its October meeting. Rates have drifted to their lowest level since September 2026.
Purchase applications dropped 2% from the previous week and were 19% lower year over year. Refinance demand rose just 0.1% for the week but remains 60% lower than the same week one year ago. Rates are still about a full percentage point higher than they were one year ago, giving borrowers little reason to refinance.
The share of adjustable-rate mortgages continued climbing as borrowers seek lower initial payments. The average rate on a 5/1 ARM fell to 6.29% from 6.41%. Fratantoni noted the ARM share reached its highest level since September 2025.
Mortgage rates moved slightly higher early in the week after job openings data came in hotter than expected. Matthew Graham, chief operating officer at Mortgage News Daily, said stronger labor market data tends to put upward pressure on rates.