Mortgage Applications Continue To Drop After Rates Surge to 3-Year High

Mortgage applications fell this past week as mortgage rates surged to their highest level in three years amid a global bond selloff, giving wary homebuyers little incentive to come off the sidelines, according to the Mortgage Bankers Association.For the week ending on Oct. 7, MBA's Market Composite Index—a measure of total mortgage loan application volume—decreased 4.2% from the prior week on a seasonally adjusted basis from one week earlier.The Purchase Index, deemed a leading indicator for home sales, dipped 2% compared to the previous week after seasonal adjustment. Purchase activity was down 15% from a year ago.The seasonally adjusted Refinance index also plunged 8% week over week to its lowest level since 2025, and was less than half of last year's pace."Very few homeowners have an incentive to refinance at these rates, and the jump in borrowing costs has caused many potential borrowers to step back from the purchase market," says Joel Kan, MBA's vice president and deputy chief economist.According to MBA calculations, the average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances hit 7.49% as a result surging Treasury yields.Freddie Mac put a...