U.S. mortgage applications declined last week as homebuyer demand weakened despite a modest decline in borrowing costs, underscoring the continued affordability challenges confronting the housing market.
Total mortgage application volume fell 1.2% on a seasonally adjusted basis during the week ending October 30, 2026, compared with the previous week, according to the latest Weekly Mortgage Applications Survey released by the Mortgage Bankers Association (MBA). On an unadjusted basis, applications decreased 2%.
The decline was driven primarily by weaker home purchase activity. The MBA’s seasonally adjusted Purchase Index dropped 2% from the previous week, while the unadjusted index fell 4%. Purchase applications were also down 19% compared with the same week a year earlier, signaling that lower mortgage rates have yet to translate into a meaningful recovery in buyer demand.
Refinancing activity was essentially unchanged, with the Refinance Index edging up 0.1% from the previous week. However, refinancing applications remained 60% below year-ago levels, reflecting limited refinancing incentives for homeowners who secured mortgages at substantially lower interest rates in previous years.
Mike Fratantoni
“Mortgage rates drifted down to their lowest level since September 2026 last week in the wake of the Federal Reserve’s decision to hold on additional rate hikes at its October meeting,” said Mike Fratantoni, MBA’s SVP and Chief Economist. “While the 30-year rate declined to 7.3 percent, activity is still quite slow, with purchase application volume down for the week and refinance volume effectively flat at a very low level. 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.”
The average contract interest rate on 30-year fixed-rate mortgages with conforming loan balances of $832,750 or less declined to 7.30% from 7.37% the previous week. Points, including the origination fee, edged down to 0.75 from 0.76 for loans with an 80% loan-to-value ratio.
Rates on jumbo 30-year fixed mortgages also declined, falling to an average of 7.20% from 7.28%. Points decreased to 0.48 from 0.64.
For government-backed financing, the average contract rate on 30-year FHA mortgages decreased to 7.02% from 7.12%, while points remained unchanged at 1.07.
Meanwhile, the average rate on 15-year fixed-rate mortgages moved in the opposite direction, increasing to 6.76% from 6.70%, with points rising to 0.98 from 0.85.
Adjustable-rate mortgages continued to attract a larger share of borrowers seeking lower initial payments. The average contract rate on 5/1 ARMs declined to 6.29% from 6.41%, while points decreased to 1.00 from 1.20.
Adjustable-Rate Mortgages Gain Market Share
The growing preference for adjustable-rate financing was reflected in the MBA’s latest application breakdown. ARMs accounted for 11.4% of total mortgage applications, their highest share since September 2025, as borrowers increasingly weighed lower initial payments against the longer-term uncertainty of variable interest rates.
The refinance share of total mortgage activity also increased, reaching 39.8%, compared with 38.9% the previous week. However, the increase largely reflected the decline in purchase applications rather than a substantial improvement in refinancing demand.
Among government-backed loan programs, the FHA share of total applications slipped to 16.0% from 16.6%. The VA share increased slightly to 11.2% from 11.0%, while USDA-backed applications accounted for 0.6%, up from 0.5%.
Housing Market Recovery Remains Elusive
The latest mortgage application figures highlight the persistent disconnect between modest improvements in mortgage rates and actual housing demand.
Although borrowing costs eased across most major mortgage categories, prospective buyers remain constrained by elevated financing expenses, home prices and affordability pressures. The 19% annual decline in purchase applications suggests that many households continue to postpone buying decisions despite incremental improvements in borrowing conditions.
For existing homeowners, refinancing activity remains particularly subdued, with the vast majority of borrowers having little financial incentive to replace mortgages originated at significantly lower rates.
With mortgage rates still elevated and adjustable-rate products gaining popularity, the housing market continues to face a challenging environment heading into the final months of 2026.
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