Mortgage Rates Hit 7.3%: Application Volume Plunges to Slowest Pace Since 2025

Mortgage applications fell 6% last week, as the Federal Reserve interest rate hike continues to slow the market, according to the Mortgage Bankers Association.

For the week ending Sept. 25, MBA's Market Composite Index—a measure of total mortgage loan application volume—fell 6% on a seasonally adjusted basis from one week earlier.

The seasonally adjusted Purchase Index, which measures the volume of mortgage applications to purchase a single-family home, also decreased 4% from one week earlier. Purchase applications were down 14% from a year ago. The refinancing index also declined 9% for the week and was 56% lower than the same week one year ago.

Joel Kan, CMB, MBA’s Vice President and Deputy Chief Economist, attributed the decline to the recent surge in rates.

“Mortgage rates jumped to their highest level in almost three years, pushing borrowers to the sidelines. The 30-year fixed rate increased for the sixth consecutive week to 7.3%, the highest rate since November 2023,” said Kan.

"Mortgage applications fell by 6 percent due to the recent surge in rates, with purchase and refinance applications both declining to their slowest weekly pace since 2025. Government refinances declined 13 percent, with both FHA and VA applications experiencing double digit decreases over the week."

Last week, mortgage rates climbed to 7.03% per Freddie Mac, up from 6.95% the week before and 6.3% a year ago.

The latest Realtor.com® monthly housing market trends report showed sellers trying to offset rising mortgage rates by cutting prices. Around 20.8% of listings nationwide employed a price cut, up 0.9 percentage points year over year.

"Demand rarely picks up much this time of year regardless, but the rate environment and underlying geopolitical uncertainty made sure the housing market’s fall stall came early this year," Realtor.com senior economist Jake Krimmel previously noted.

Meanwhile, Kan noted, purchase and refinance applications both declined to their slowest weekly pace since 2025.

The share of FHA loan applications remained unchanged at 16.7% from the prior week. The VA share of total applications decreased slightly to 11.9% from 12% the prior week. The USDA share of total applications decreased to 0.5% from 0.6% the week prior.

How mortgage rates are calculated

Mortgage rates are calculated based on various factors in the economy, and the length of your loan and credit score will also factor into the mortgage rate you qualify for.

The 30-year mortgage rate is tied to the yield of the 10-year Treasury note, because most 30-year mortgages are either paid off or refinanced in roughly eight to 11 years.

That makes the duration on the loans roughly comparable, and mortgage lenders use the 10-year Treasury as a benchmark for setting rates, adding on a risk premium.

Long-term yields for Treasury notes are determined by a number of factors, including the supply of and demand for U.S. government debt, and investor expectations for inflation over the life of the bonds.