Franklin, Tenn. — October 8, 2026

Applications to refinance a home loan fell 8% in the week ending Oct. 2 and were 56% below the same week a year earlier, the Mortgage Bankers Association reported Wednesday, as borrowing costs climbed to their highest level in nearly three years.

The trade group's Refinance Index dropped to 515.8 from 557.8 the prior week. Refinances made up 37% of all mortgage applications, down from 38.3%. Total application volume fell 4.2% on a seasonally adjusted basis.

The MBA said the average contract rate on a 30-year fixed loan with a conforming balance of $832,750 or less rose to 7.49% from 7.30%, with points increasing to 0.84 from 0.75 for loans with a 20% down payment.

"Very few homeowners have an incentive to refinance at these rates," Joel Kan, the MBA's vice president and deputy chief economist, said in the release. "With rates roughly a percentage point higher than a year ago, refinance applications last week were at the lowest level since 2025 and fell to less than half of last year's pace."

Kan attributed the latest increase to both higher Treasury yields and wider spreads between mortgage rates and Treasuries as rate volatility rose. Purchase applications also slipped 2% for the week and were 15% below a year earlier, with FHA purchase applications falling the most, down 6%.

Borrowers who are applying are increasingly reaching for lower initial payments. The adjustable-rate share of applications held at 10.3%, according to the MBA. CNBC noted that during the first years of the pandemic, when fixed rates were setting record lows, the adjustable share was below 3%.

As rates rise, the pool of borrowers who would save money by refinancing shrinks, CNBC reported. That leaves a narrower set of reasons to refinance. Some homeowners refinance to remove a co-borrower after a divorce or to buy out another owner's share. Others with adjustable-rate loans nearing their first reset weigh moving into a fixed rate to put a ceiling on future payments. Borrowers with FHA loans who have built substantial equity sometimes compare a conventional refinance that could end monthly mortgage insurance, a calculation that depends on the gap between the old and new rates.

For homeowners who need cash but already hold a low first-mortgage rate, a cash-out refinance replaces the entire balance at today's higher rate. That is why many owners in that position compare a home equity line of credit or home equity loan, which leaves the existing first mortgage in place.

Whatever the reason, the basic test is the same: total closing costs measured against the monthly change in payment, and how many months it takes for any savings to cover those costs. The MBA's figures reflect last week's applications rather than this morning's pricing, and a written loan estimate is the only reliable basis for that comparison.

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