According to HousingWire, mortgage applications took a step backward recently, dropping 4.2% week over week as borrowing costs climbed. The data comes from the Mortgage Bankers Association's weekly survey for the week ending in early October of this year. Both refinance and purchase activity declined, though the refinance market was hit harder, falling 8% compared to the previous week. Purchase applications slipped 2% during the same period, while adjustable-rate mortgages held steady at about 10% of total applications.
The main culprit behind the slowdown was rising rates. The 30-year fixed mortgage rate climbed to 7.49%, reaching its highest level in nearly three years. This represents roughly a full percentage point increase compared to rates from a year earlier. With rates this elevated, homeowners have very little motivation to refinance, and potential buyers are increasingly hesitant to enter the market. The refinance share of all applications fell to just over one-third of total activity, down from the week before.
The pain was felt across different loan products. FHA purchase applications declined the most, dropping 6%, as these borrowers tend to be more sensitive to rate increases given their already-stretched affordability situations. To cope with higher payments, more borrowers are turning to adjustable-rate mortgages to start with lower initial rates, though the overall ARM share remained relatively flat at just over 10%. Both VA and USDA loan shares also declined slightly during the period.
Looking at specific rates, conforming mortgages increased to 7.49%, while jumbo loans came in at 7.39%. FHA-backed mortgages rose to 7.14%, and 15-year fixed rates climbed to 6.71%. Additional data from Xactus, which tracks actual credit-pull activity across the mortgage market, showed mortgage intent falling roughly 5.7% week over week. Year over year, this intent measure is down approximately 21%, suggesting that seasonal fourth-quarter weakness in mortgage activity is beginning to take hold.
What I am seeing locally here in the Bay Area and across the East Bay reflects this exact dynamic. When rates move up this significantly, you feel it immediately in buyer behavior. People who were seriously considering a move suddenly pause and wait, hoping rates might come back down. Sellers are adjusting their expectations because they know fewer qualified buyers are actively shopping. In a market like ours where affordability is already challenging, these rate increases create real friction for families trying to make their move.
