Mortgage Applications Slip 2.7% as ARM Share Hits 10.5%, Highest Since October 2025

Mortgage demand fell again last week as rates stayed near a three-year high. Total application volume dropped 2.7% from the previous week on a seasonally adjusted basis, according to the Mortgage Bankers Association, and was 37.5% lower than the same week a year ago.

The average contract rate for a 30-year fixed mortgage with a conforming balance rose slightly to 7.50% from 7.49%, with points easing to 0.83 from 0.84 for loans with 20% down. The rate was more than a full percentage point higher than a year earlier, according to the report, which was covered by CNBC.

More borrowers are turning to adjustable-rate loans to lower the initial payment. The MBA put the ARM share at 10.5%, its highest since October 2025. ARMs can offer a lower rate that is fixed for a period of up to 10 years, but the rate then adjusts with market conditions, which adds risk if rates stay high or rise further.

Purchase and refinance activity both stayed weak. Purchase applications fell 4% for the week and were 16% lower than a year ago, while refinance applications edged down 0.4% for the week and were 56% lower year over year. The report also noted that inventory gains have come more from slower sales than from a surge in new listings, and that available supply skews toward the higher end.

For South Bay buyers, the takeaway is two-sided: fewer competing applications can mean less bidding pressure, but qualifying at 7.50% is harder, and an ARM only helps if the fixed period, adjustment caps and exit plan are understood before signing.

Source: CNBC via Fresh Blog News, summarizing Mortgage Bankers Association data - https://freshblognews.com/even-more-borrowers-choose-riskier-mortgages-as-higher-interest-rates-crush-affordability-html/

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