Mortgage Demand Drops as Rate Climbs Toward 7 Percent

Fast-rising mortgage rates are pushing both prospective homebuyers and homeowners looking to refinance toward the sidelines.

Mortgage applications fell 4.1 percent on a seasonally adjusted basis for the week ending Sept. 11, according to the Mortgage Bankers Association’s (MBA’s) latest Weekly Mortgage Applications Survey.

The decline came as the average contract rate on a 30-year fixed mortgage climbed to 6.97 percent from 6.85 percent, its highest level since May 2025.

“Ongoing market concerns over spiking energy prices, persistently high inflation, and future monetary policy pushed bond yields and mortgage rates higher last week,” said Joel Kan, MBA’s vice president and deputy chief economist.

MBA’s Purchase Index, which measures applications for mortgages to buy single-family homes, fell 1 percent from the previous week on a seasonally adjusted basis.

On an unadjusted basis, the Purchase Index fell 13 percent from the previous week and was 19 percent lower than the same week a year earlier.

Refinancing activity also declined. MBA’s Refinance Index dropped 9 percent from the previous week and was 65 percent below its year-ago level.

The share of applications for Federal Housing Administration-backed loans fell to 16.9 percent from 17.2 percent the previous week, while the share for Department of Veterans Affairs-backed loans edged up to 12.4 percent from 12 percent.

“The current level of rates eliminated much of the benefit to refinance for many borrowers, resulting in declines in conventional, FHA, and VA refinance applications,” Kan said.

A separate survey from Freddie Mac put the average 30-year fixed mortgage rate at 6.76 percent for the week ending Sept. 10, up from 6.71 percent the previous week and 6.35 percent a year earlier.

Freddie Mac and MBA use different methodologies and measurement periods to calculate their weekly averages.

Daily readings, however, showed rates already moving above 7 percent. The average 30-year fixed rate reached 7.07 percent on Sept. 10 and climbed to 7.12 percent on Sept. 11, according to Mortgage News Daily.

Mortgage rates tend to move closely with yields on longer-term government bonds, particularly the 10-year Treasury.

The benchmark yield climbed above 5 percent on Sept. 14, a level briefly reached in 2023 and otherwise not seen since 2007, before retreating to just below that threshold.

The latest mortgage application data add to other signs that elevated borrowing costs are weighing on housing activity.

On Sept. 15, MBA reported that applications for mortgages to purchase newly built homes fell 6 percent in August from July and 5.5 percent from a year earlier, dropping to their lowest level of 2026.

Existing-home sales also weakened in August, falling 2 percent from the previous month and 1.2 percent from a year earlier, according to the National Association of Realtors.

The median existing-home price, however, rose 1.6 percent from a year earlier to $429,100, the highest level on record for an August.