Mortgage applications took a step back last week as borrowing costs climbed closer to the 7% threshold, according to the Mortgage Bankers Association's latest survey. For the week ended September 11, total application volume fell 4.1%, while the average contract rate on a 30-year fixed-rate conforming loan rose 12 basis points to 6.97%—the highest level since May 2025.
The data, released September 16, reveals a housing market grappling with affordability challenges. The refinance index tumbled 9% from the previous week and sits a staggering 65% below the same period a year ago. Meanwhile, the seasonally adjusted purchase index dipped just 1% week-over-week, but the unadjusted measure remains 19% below last year's levels.
That year-over-year purchase gap is particularly telling for investors. A single-week decline can be influenced by calendar quirks—this survey was adjusted for Labor Day—but a sustained shortfall of nearly one-fifth points to deeper affordability constraints rather than a temporary holiday pause.
The rate increase was accompanied by higher points, which rose to 0.72 from 0.67 for loans with 80% loan-to-value ratios. On a $400,000, 30-year mortgage, the principal and interest payment at 6.97% would be approximately $2,653 per month—about $32 more than at 6.85%, not including taxes, insurance, or upfront costs. Actual borrower rates vary based on credit, down payment, and lender pricing.
It's worth noting that Freddie Mac's weekly survey reported a slightly different rate of 6.76% for the week of September 10, up from 6.71%. The discrepancy is not unusual; the two surveys use different methodologies, lender samples, and timing. Freddie Mac's data is based on conventional conforming purchase applications submitted through its Loan Product Advisor, while the MBA's survey covers a broader set of lenders and includes points.
Other mortgage products also saw upward pressure. The MBA's jumbo rate jumped 29 basis points to 7.03%, moving above the conforming rate. The FHA 30-year rate rose to 6.62%, the 15-year fixed rate reached 6.30%, and the average 5/1 adjustable-rate mortgage surged 41 basis points to 6.23%. The refinance share of total applications slipped to 39.4% from 40.9%.
The survey predates the Federal Reserve's latest policy decision, where the central bank raised its target range by a quarter point to 3.75%–4.00%, citing persistent inflation. While mortgage rates are not directly tied to the federal funds rate, they are influenced by longer-term Treasury yields, inflation expectations, and investor demand for mortgage-backed securities. The Fed's move offers little immediate relief if long-term yields remain elevated.
For lenders, the 65% annual decline in refinancing is a pressing volume challenge. Homebuilders and brokers watch purchase applications as an early indicator of sales activity. Agency mortgage-bond investors, meanwhile, may find higher coupons attractive, though slower refinancing extends the expected life of loans—a factor that can offset yield benefits.
On the positive side, the seasonally adjusted purchase index fell only 1% from the prior week, suggesting that one week's data does not necessarily signal a new downturn. A sustained trend would require several more weeks of weak numbers or a meaningful drop in Treasury yields. For now, the weekly noise is minimal, but the 19% annual purchase deficit and 65% refinancing deficit remain significant headwinds for the housing market.
