Mortgage application activity declined in October as the 30-year fixed mortgage rate rose sharply again. The Mortgage Bankers Association’s (MBA) Market Composite Index, a measure of total mortgage application volume, fell 14.1% month-over-month in October on a seasonally adjusted basis. Compared to a year ago, total mortgage applications were 39.8% lower. Higher fixed mortgage rates continued to drive borrowers toward adjustable-rate mortgages (ARMs), whose share of total applications increased to 10.8%.
Steep declines occurred in both major components as the average contract rate for a 30-year fixed-rate mortgage jumped 35 basis points (bps) to an average of 7.4% in October. Purchase applications decreased 11.9% from September, while refinance applications declined 17.3%. Relative to October 2025, purchase and refinance activity were also down 17.3% and 58.5%, respectively.
Meanwhile, the average contract interest rate for 5/1 ARMs was 6.4% in October. The lower initial interest rate and monthly payments made ARMs relatively more attractive to borrowers, contributing to a 0.7% increase month-over-month. Nonetheless, ARMs remained 31.1% lower than a year ago. The ARMs share of total applications for October increased 1.5 percentage points to 10.8%. Meanwhile, applications for fixed-rate mortgages declined 15.5% month-over-month and 40.7% year-over-year.
Average loan sizes declined across most categories in October. The overall loan size decreased 1.5% to $375,200. Purchase loans, however, saw a marginal increase of 0.5% to an average loan size of $448,500. Meanwhile, the average refinance loan size declined 8.0% to $257,840, and ARMs loan size declined 4.8% to an average of $854,180.
