Despite mortgage rates falling for three consecutive weeks, total mortgage application volume slid 1.2% week-over-week, according to the Mortgage Bankers Association’s seasonally adjusted index. The Mortgage Bankers Association (MBA) reported the decline in its seasonally adjusted index, which comes after rates reached their lowest level since September 2026 in the wake of the Federal Reserve’s decision to hold on additional rate hikes.
Declining Purchase Applications
Home mortgage purchase applications dropped by 2% compared to the prior week and were down 19% from the same period a year earlier. This suggests the housing market has not shown any signs of warming up since the significant rate hike in September caused it to enter a deep freeze. The decrease in purchase activity, even with reduced rates, implies that prospective homebuyers are still hesitant to make a move.
Refinance Activity Stagnant
Refinance demand was essentially flat for the week, rising just 0.1%. It was, however, 60% lower than the same week one year ago. Mortgage rates, despite falling for now three straight weeks, are still about a full percentage point higher than they were at this time last year. That gives borrowers very little incentive to refinance,
said Mike Fratantoni, senior vice president and chief economist at the MBA.
Shift to Adjustable-Rate Mortgages
The proportion of adjustable-rate mortgages, which provide lower initial rates but pose the risk of eventually increasing, continued to rise. The average rate on a 5/1 ARM fell to 6.29% from 6.41% the prior week. As we have highlighted in recent weeks, more borrowers are choosing ARMs in this environment to lower their initial payments, with the ARM share at its highest level since September 2025,
added Fratantoni. Mortgage rates edged up slightly at the beginning of this week, based on a separate survey from Mortgage News Daily, which pointed to a report on job openings that was stronger than anticipated as a reason.
