Mortgage applications dropped 4.1% for the week ending Sept. 11, as the average 30-year fixed mortgage rate climbed to 6.97%, the highest level since May 2025, according to the Mortgage Bankers Association (MBA).
Both purchase and refinance activity weakened, with the MBA’s Purchase Index falling 1% from the prior week and refinancing activity dropping 9%. On an unadjusted basis, purchase applications were 19% lower than the same week a year earlier, while refinancing volume was 65% below year-ago levels.
Rising borrowing costs and market concerns over energy prices, inflation, and monetary policy drove the decline, MBA officials said. The average contract rate for a 30-year fixed mortgage rose from 6.85% to 6.97%, with points increasing to 0.72 from 0.67 for loans with a 20% down payment. By last Thursday, rates had surpassed 7%, according to Mortgage News Daily.
The share of applications for Federal Housing Administration (FHA)-backed loans fell to 16.9%, while Department of Veterans Affairs (VA)-backed loans rose slightly to 12.4%. The MBA noted that higher rates reduced the financial incentive for refinancing across conventional, FHA, and VA loans.
A separate survey from Freddie Mac reported the average 30-year fixed mortgage rate at 6.76% for the week ending Sept. 10, up from 6.71% the prior week and 6.35% a year earlier. The MBA and Freddie Mac use different methodologies, leading to slight variations in their rate calculations.
The decline in mortgage demand reflects broader economic pressures, including spiking energy prices and persistent inflation, which have contributed to higher bond yields and mortgage rates. Industry analysts warn that sustained elevated rates could further dampen housing market activity in the coming months.