Mortgage application activity declined as the 30-year fixed mortgage rate rose sharply. The Mortgage Bankers Association’s (MBA) Market Composite Index, a measure of total mortgage application volume, decreased 7.7% month-over-month in September on a seasonally adjusted basis. Compared to a year ago, total mortgage applications were lower by 35.4%. Higher fixed mortgage rates contributed to a rise in applications for adjustable-rate mortgages (ARMs), which increased 7.6% month-over-month. As a result, the ARMs share of total applications increased to 9.3%.
The monthly decline occurred in both major components. Purchase applications decreased 1.3% from August, while refinance applications declined 16.5%. Relative to September 2025, purchase and refinance activity were also down 11.6% and 54.7%, respectively.
Market activity continued to slow as the average contract rate for a 30-year fixed-rate mortgage rose significantly in September. The mortgage rate jumped 28 basis points (bps) to 7.1% and was 64 bps higher than a year ago.
The average contract interest rate for 5/1 ARMs was 6.2% in September. The lower initial interest rate and monthly payments made ARMS relatively more attractive to borrowers, contributing to a 7.6% increase in ARMs applications during the month. Nonetheless, compared to a year ago, ARMs applications remained 40.1% lower. As a result, the ARMs share increased 1.4 percentage points to 9.3%. Meanwhile, applications for fixed-rate mortgages declined 9.1% month-over-month and 34.8% year-over-year.
Interestingly, the overall loan size increased 1.4% to $380,500. The increase was driven primarily by purchase loans, for which the average loan size increased 1.1% to $445,800. Meanwhile, the average refinance loan size edged down 1.2% to $279,500, while the average ARMs loan size declined 2.9% to $896,800.
