Purchase, refinancing activity fell as borrowing costs increased
Oct 3, 2025, 7:30 PM UTC
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After hitting a year-to-date low last month, mortgage rates are on an upward trend again.
The average 30-year, fixed-rate mortgage rate was 6.34 percent for the week ending Thursday, according to FreddieMac’s latest primary mortgage market survey. That’s up 0.04 percentage points from the week before and 0.22 percentage points from the same time last year.
The average 15-year, fixed-rate mortgage rate was 5.55 percent this week, 0.06 percentage points higher than last week and 0.3 percent higher year over year.
Climbing rates have led to a drop in new mortgage and refinance applications, which spiked last month.
Compared to the week before, mortgage apps fell 12.7 percent and refinancings dropped 21 percent for the week ending Sept. 26, according to the Mortgage Bankers Association’s weekly survey.
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The Federal Reserve during its last meeting in September cut its benchmark interest rate for the first time in nine months. The market had anticipated the cut, which was a quarter point, and interest rates began to slide in July, eventually hitting their lowest point all year shortly before the official announcement from the central bankers.
The hype leading up to the cut led to a wave of new mortgage and refinancing activity. Average rates have since risen as Treasury yields have also gone up.
Home selling also saw a flurry of activity thanks to the falling rates. The National Association of Realtors’ index for pending home sales — those that entered into contract — climbed 4 percent in August compared to the month before and 3.8 percent year over year.
But as borrowing costs continue to creep up, the residential market is likely to see these glimmers of growth fade once again.
“After the burst in refinancing activity over the past month, this reversal in mortgage rates led to a sizeable drop in refinance applications, consistent with our view that refinance opportunities this year will be short-lived,” said Joel Kan, MBA’s vice president and deputy chief economist, in a statement.